Entertainment content company Viacom (NYSE:VIA) (NYSE:VIA.B) is currently benefitting from a number of television hits and a recovery in advertising spending along with the economy. Its film unit isn't doing as well, but hasn't stopped total company sales or profits from moving forward.

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Third Quarter Review
Viacom reported results that would have normally qualified as its third quarter. However, it changed its fiscal year end to September, so this period also counted as the final quarter in its new fiscal year. Total revenues increased a respectable 5% and reached $3.3 billion.

Viacom operates two primary segments. The first is Media Networks that consists of television channels and related content from the likes of MTV Networks (including MTV, VH1, CMT) and Nickelodeon, Comedy Central and Spike TV. This unit accounted for 64% of the total top line and experienced 8% growth on a boost in advertising trends. Filmed Entertainment through Paramount Studios posted 1% growth to account for the rest of sales.

Its cable offering is also riding high from a number of hit shows. This isn't occurring in the film segment, so the company remains focused on controlling costs and is hopeful for stronger movie results going forward. This came through in divisional profitability as media logged robust 9% operating income growth to account for all of profits when stripping out corporate overhead. Film saw a 29% fall in operating profits.

Total earnings from core operations rose more than 7% but the decision to sell off a gaming division resulted in a charge that lowered reported earnings by more than 60%. Reported net income came in at $189 million, or 31 cents per diluted share. The company estimated this would have been 75 cents and year-over year growth of 6% when backing out the one-time charge and other items it didn't consider recurring.

Outlook
For the full year, analysts predict sales growth of more than 5% and total sales will reach more than $14 billion. Earnings should reach about $3.24 per share for year-over-year growth in the low double digits.

Viacom's share price continues to move upward and is bumping up against its highs over the past year. At current levels, the forward P/E is still pretty reasonable at about 14, though it has also increased along with the price. (For related reading, see How To Find P/E And PEG Ratios.)

The Bottom Line
Viacom, along with Time Warner (NYSE:TWX) and Disney (NYSE:DIS), is a leading provider of entertainment content that should remain relevant as distribution continues to shift to the internet. The spinoff of CBS (NYSE:CBS) and a now-bankrupt Blockbuster helped ensure this transition. The risk is that advertising revenue falls over the long haul, but this fate is not at all certain. For now, Viacom can ride a recovery in advertising along with the overall economy and will benefit even more if its film unit releases a few hits sometime soon.

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