The debt offering takes advantage of the market’s low interest rates, and will help fuel Viacom’s recently announced plan to double its stock repurchase effort to $20B — including $3B to take place in 2013. The decision to raise overall debt led Moody’s Investors Service to lower Viacom’s senior unsecured rating to Baa2 from Baa1. The buy-back “appears to be a one-time effort to smooth over the anemic growth by returning more capital to win the favor of shareholders,” Moody’s said. The plan has worked so far: Viacom shares are up 10.2% following the repurchase announcement. As for the debt, Viacom says that it will consist of three offerings with $500M in senior notes paying 2.5% due in 2018, $1.25B in senior notes at 4.25% due 2023, and $1.25B in senior notes at 5.85% due 2043. Citigroup Global Markets; J.P. Morgan Securities; Merrill Lynch, Pierce, Fenner & Smith; and RBS Securities are the joint book-running managers.
UPDATE, 6:55 AM: CEO Philippe Dauman says that Paramount is starting to make business plans for 2013 and 2014 and “can accommodate having Dreamworks [Animation] titles in or out” after their distribution deal expires next year. He told analysts, in a conference call, that the companies have “a strong relationship” and that he’s ready to discuss a new deal whenever Dreamworks Animation CEO Jeffrey Katzenberg is ready. But he added that Paramount’s “development pipeline is strong” and will include more animated films following the success of its first effort, Rango.
Dauman also says that the company plans “a very significant increase” over the next year or 2 in the amount of original shows it will run on cable channel Spike. He added that he expects “significant year-over-year gains” in upfront ad sales across Viacom’s networks.
PREVIOUS, 5:11 AM: Helped by a strengthening ad market, TV hits including MTV’s Jersey Shore, and a Paramount Pictures slate that included Rango, Viacom far exceeded Wall Street analysts’ forecasts for its financial performance in the quarter that ended in March. The entertainment giant reported net earnings of $376 million, up 47% vs. the same period last year, on revenues of $3.3 billion, up 20%. That translated into 72 cents in earnings per share. The consensus forecast among analysts put earnings of 61 cents with revenues of $3 billion.
“This was an outstanding quarter, reflecting our continued operating momentum,” Viacom CEO Philippe Dauman said in a prepared statement.
NEW YORK, Jan. 13, 2011 — Viacom Inc. today announced that its Board of Directors has declared a quarterly cash dividend of $0.15 per share on its Class A and Class B common stock. The dividend will be payable on April 1, 2011 to stockholders of record at the