Earnings Preview: Viacom

Jul.27.09 | About: Viacom Inc. (VIA)

Viacom (NASDAQ:VIA) is expected to report Q2 earnings before the market open on Tuesday, July 28 with a conference call scheduled for 8:30 am ET.

Guidance

Analysts are looking for a profit of 49c on revenue of $3.5B. The consensus range is 42c-57c for EPS, and revenue of $3.25B-$3.98B, according to First Call. In June, its MTV Networks unit announced plans to cut about 75 positions due to the recession. Viacom’s Paramount Pictures is holding advanced negotiations on merging its home entertainment division with a competitor such as Sony's (NYSE:SNE) Sony Pictures and News Corp.'s (NASDAQ:NWS) Fox studio, according to the Financial Times.

Analysts and investors will listen for comments on the auction of National Amusements, also owned by Chairman Sumner Redstone. If Redstone doesn't raise enough money to pay down his company's $1.45B debt, he may be forced to sell more stock in Viacom and CBS (NYSE:CBS). In addition, they will listen for comments on advertising trends at its cable networks. In April, CEO Phillippe Dauman said the ad market appeared to be stabilizing. While some media stocks have recently gained on optimism there will be an advertising recovery in 2H09, many analysts believe the media sector will report lackluster earnings as well as less optimism on a recovery this year.

Analyst Views

An analyst at Caris downgraded shares to Below Average from Average in June, explaining that the firm is concerned that Viacom's upcoming slate of films "is starting to receive negative chatter.