Viacom takes hit in second quarter as profit falls 32%

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Viacom Inc.’s second-quarter profit fell 32% as a tough economy battered its cable networks around the globe and video-game sales for Rock Band dropped.

For the quarter ending June 30, Viacom posted net income of $277 million, or 46 cents a share, compared to $407 million, or 65 cents a share, for the same period in 2008. Revenues at Viacom, parent of cable networks MTV, Nickelodeon and Comedy Central and movie studio Paramount Pictures, fell 14% to $3.3 billion.

Revenues at Viacom’s Media Networks unit, which includes cable and video games, were off 8% to $1.97 billion. Advertising revenue at the cable channels were off 6% in the U.S. and 8% around the globe. Ancillary revenues, which include video games, plummeted 41% because of a dramatic slowdown in sales of Rock Band. The company is anticipating a big lift from the premiere of The Beatles version of Rock Band. Revenues from Filmed Entertainment, which includes Paramount Pictures, were off 22% to $1.38 billion as the studio itself swung to a loss of $25 million for the quarter.

Viacom Chairman Sumner Redstone said the company’s performance was ‘solid’ in very difficult circumstances. He also said the auction of closely held National Amusements is drawing ‘substantial interest’ and that he was ‘extremely pleased’ with the relationship with his banks ‘regardless of what you hear,’ which seemed to be a not-so-subtle shot at the tough story in the Los Angeles Times on Monday about the challenges Redstone was facing if the auction did not go well.

Viacom made a little news on the call as well. The company said it signed its first distribution deal for its new pay cable channel Epix with Verizon. Epix, which launches later this year, is trying to compete in an already-crowded marketplace.

-- Joe Flint