Viacom profit slumps with charges

NEW YORK (Reuters) - Viacom Inc , owner of MTV Networks and Paramount movie studio, reported sharply lower fourth-quarter earnings, battered by an advertising slump, poor ratings at some of its key TV networks and a softening DVD market.

Net profit, which included a $454 million restructuring charge, fell to $173 million, or 28 cents a share, from $560 million, or 86 cents a share, a year earlier.

Viacom took the charge to account for severance, a write-down of its film inventory and other items. The media company warned of the charge late last year, when it announced that it would cut around 7 percent of its workforce in an effort to counter a deteriorating ad sales market.

Adjusted earnings from continuing operations amounted to 76 cents a share, down from 84 cents a share in the year ago period and short of the 78 cents a share analysts polled by Reuters Estimates had expected.

Revenue at Viacom, which is also home to Nickelodeon, Comedy Central and the popular video game "Rock Band," was essentially flat at $4.24 billion in the quarter.

"Our fourth quarter results reflect the realities of a challenging economy," Chief Executive Philippe Dauman said in a statement. "The broad marketplace conditions weighed on our advertising, home entertainment and consumer products businesses."

With about one-third of Viacom's revenue coming from advertising, the downturn in spending -- particularly from automotive, financial services and retail companies -- has badly hurt results and pushed the company to look for ways to drive down costs.

Late last year, it said it would seek to save $200 million to $250 million in 2009 from a series of cost-cutting moves. In addition to cutting jobs, Viacom also froze salary increases for senior management in 2009 and consolidated its leases.

Meanwhile, its film division, which holds Paramount studios, has cut back on the number of films it plans to release each year. Theatrical revenue grew 28 percent in the quarter, thanks to movies like "Madagascar 2: Escape to Africa" and "The Curious Case of Benjamin Button."

While it also brought out hits "Iron Man" and "Indiana Jones and the Kingdom of the Crystal Skull" on home video, sales in the DVD market have softened throughout the industry as consumers cut back spending. Viacom said revenue in its home entertainment business dropped 6 percent in the fourth quarter.

(Reporting by Paul Thomasch; Editing by Derek Caney)