Viacom CEO talks up Q4, Spielberg

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If Steven Spielberg leaves Paramount this year, taking the DreamWorks name with him, that doesn't mean Viacom will sever all its ties with the powerful filmmaker.

"I've been spending a lot of time with Steven Spielberg," Viacom CEO Philippe Dauman said Thursday during a conference call to discuss the company's quarterly financial results.

Analysts have been concerned that Spielberg, DreamWorks CEO Stacey Snider and other top talent will leave the Paramount family ever since a rift between Viacom chief Sumner Redstone and DreamWorks co-founders Spielberg and David Geffen developed last year.

"We'll just see how our relationship progresses," Dauman told analysts Thursday.

He said he met with Spielberg a week ago to discuss the director's idea for a "pretty exciting" new franchise, though he didn't describe the project.

Dauman and other executives on the conference call also said they are not seeing any negative effects on Viacom's businesses from a sluggish U.S. economy.

This week, corporate sibling CBS Corp. tried to put investors worried about a much-discussed possible recession at ease in a similar way. (Full story)

Dauman said Viacom is blessed with several "recession-resistent" assets, though he later acknowledged that the company is "not completely immune."

Viacom reported a better-than-expected fourth-quarter profit gain of 16% thanks to its rebounding cable networks and film units, the latter being boosted by the success of "Transformers" and "Shrek the Third."

"We have made substantial progress in repositioning the studio creatively, focusing on our brands and franchises," Dauman said.

In a move that is rather uncommon in the entertainment industry these days, Viacom on Thursday also projected that for the next three years it would bring in low-double-digit percentage growth in diluted net earnings per share from continuing operations each. This is based on the $2.36 per share that the firm recorded in 2007.

Viacom's fourth-quarter profit rose 16% compared with a year ago to $559.5 million. Earnings from continuing operations climbed 14% to $545.3 million, and revenue jumped 19% to $4.3 billion.



At the firm's Media Networks unit, quarterly revenue rose 18% year-over-year to $2.5 billion, and operating profit climbed 15% to $915.5 million. Advertising revenue jumped 9% overall. Affiliate fees rose 11%. Ancillary revenue were boosted 72% to $460 million thanks to strong sales for the "Rock Band" video game and royalties for other video games, like those from the popular "Guitar Hero" franchise.

VH1 enjoyed its best year in 2007 in terms of viewership, and the 11th season of "South Park" on Comedy Central was its highest-rated since 1998, Dauman said. "MTV ratings turned the corner in the fourth quarter," he added.

Cable assets like Nick at Nite actually benefited from the WGA strike, he said, as advertisers moved from broadcast to cable television.

Filmed entertainment grew its operating profit 40% year-over-year to $117.9 million in the fourth quarter. Revenue rose 19% to $1.8 billion, driven by a 30% gain in theatrical, a 23% uptick in TV license fees and a 12% increase in home entertainment revenue.

Dauman also confirmed that the company is free to release movies in the Blu-ray DVD format, given Toshiba's decision to scrap HD DVD.

Viacom's full-year 2007 revenue rose 18% to $13.4 billion, with operating income up 6% to $2.9 billion.

Before the earnings update, Viacom Class B shares closed down 1.4% at $41.30. They rose fractionally after the closing bell.

Georg Szalai reported from New York; Paul Bond reported from Los Angeles.
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