• by Wayne Friedman , March 2, 2007

MTV owner Viacom Inc. made major financial gains in the fourth quarter--but virtually all from its movie business, thanks to the acquisition of DreamWorks last year. But gains in its traditional core business of cable network advertising have been much more modest.

On the cable front, Viacom's cable networks business--which makes up the lion's share of its operations--reported a 6% gain in profits to $809.9 million, from $761.7 million a year ago. Viacom said it earned $480.8 million in the fourth quarter, versus $129.5 million in the same period a year ago. Company revenues climbed 32% to $3.59 billion from $2.72 billion.

Overall, Viacom's profits nearly tripled in the fourth quarter, following the addition of the DreamWorks studio. That deal swung its movie business in the profit column.

But Philippe Dauman, president/CEO of Viacom, says its media networks business only grew 4% to $2.08 billion from $1.99 billion, and 7% for the year to $7.24 billion--mostly because of a lull in advertising.

Worldwide ad revenues were up 6% to $4.29 billion. Viacom expects worldwide ad revenues to continue in the mid-single-digit growth range in 2007. Affiliate revenues from cable operators grew at a faster clip of 11% to $2.03 billion.

Dauman also says MTV Networks is instituting changes. The day before, Viacom announced a restructuring of its ad sales units under specific demographic groups. He noted that the recent first-quarter advertising business was trending higher.

Now that Viacom has convinced YouTube to take down 100,000 Viacom clips, Dauman says more viewers are coming to their Web sites. Recently, Viacom entered into an agreement with a new online video service Joost, which has addressed all of Viacom's piracy concerns.