Profit rises on CBS advertising

Thursday, Oct. 28, 2004 | 9:37 a.m.

Viacom Inc., the third-largest U.S. media company, said third-quarter profit from continuing operations rose 12 percent, boosted by advertising gains at CBS and MTV. The company said it will buy back as much as $8 billion of its shares and raise its dividend 17 percent.

Profit rose to $722.6 million, or 42 cents a share, from $647.9 million, or 37 cents, a year earlier, Viacom said in a statement. Those results exclude a loss from the Blockbuster Inc. video chain, which the New York-based company spun off on Oct. 13. Viacom's sales rose 4.3 percent to $5.48 billion.

Viacom may repurchase about 13 percent of its stock under the buyback plan, which is more than analysts including Merrill Lynch & Co.'s Jessica Reif Cohen said they expected. The company's stock, which has fallen 10 percent in the past 12 months amid weak sales at Blockbuster and Infinity radio, is undervalued, said Chief Executive Sumner Redstone.

"The $8 billion is at the high end of expectations so I think investors will be delighted with that," said Angela Kohler, a media analyst with Pittsburgh-based Federated Investors Inc, of the share buyback. "They had the cash. It's just a question of where they were going to use it."