• by Wayne Friedman , May 11, 2007

Massive restructuring at MTV Networks took its toll on Viacom first-quarter earnings, dropping 36% versus the same period of a year ago. But advertising is keeping revenues high.

Viacom says net income sank to $202.9 million, while revenues climbed 16% to $2.7 billion. All that beat Wall Street estimates of $2.55 billion--which is why some stock market analysts say Viacom's results were solid.

MTV had higher programming costs, marketing expenses and stock-based compensation. MTV has had a major restructuring of senior executives during the last several months. Viacom's media network revenues rose 10% to $1.73 billion.

"Advertising was strong in the first quarter," said Viacom president/CEO Philippe Dauman. "As far as scatter market CPMs [the cost per thousand viewers] go. Those have been very robust. We are seeing double-digit increases."

Viacom's filmed entertainment, primarily from Paramount Pictures and DreamWorks, had a loss of $106 million during the period--all because of higher print and advertising costs. But revenues grew to $1.05 billion.

When questioned about lower ratings at MTV Networks, Tom Dooley, Viacom's chief administrative officer and CFO, admitted that time spent on the network is down.

However, Viacom says it is putting a lot of effort into getting entertainment to consumers through mobile, Internet, and other alternative media. "A lot of our programming is designed in a clip-able form," said Dooley. "That is not by accident--and is very unique to us."

Regarding digital advertising revenues, Dauman says many agreements are not necessarily tied into traditional TV upfront deal--rather, they are part of ongoing multi-year relationships.