Viacom Reports Record First Quarter 2004 Results Quarter Paced By Double-Digit Increases in Revenues,

Operating Income and Net Earnings



* Advertising Revenues Climb 21% to $3.2 Billion



* Revenues Up 12% to Record $6.8 Billion, Led By Growth of 21% in Cable

Networks and 18% in Television



* Operating Income Rises 20% to Record $1.2 Billion



* Net Earnings Up 60% and Diluted EPS Up 62% to $.41 From $.25;

Excluding $141 Million, or $.08 Per Share Tax Benefit, Net Earnings

Up 29% and Diluted EPS Up 30% to $.33



    NEW YORK, April 22 /PRNewswire-FirstCall/ -- Viacom Inc. (NYSE:   VIA and
 VIA.B) today reported record results for the first quarter ended March 31,
 2004, including double-digit gains in revenues, operating income and net
 earnings.
     For the first quarter of 2004, Viacom revenues increased 12% to a record
 $6.8 billion from $6.1 billion for the same quarter last year, reflecting
 growth in every core business segment.  Contributing to 2004 first quarter
 results was a 21% gain in overall advertising revenues, which totaled $3.2
 billion.  First quarter operating income increased 20% to $1.2 billion from
 $987 million, led by strong growth of 24% in Cable Networks, 38% in Television
 and 55% in the Entertainment segment.
     First quarter 2004 net earnings increased 60% to $711 million, or $.41 per
 diluted share, from $443 million, or $.25 per diluted share, in the same
 quarter last year.  Results for the first quarter of 2004 include the
 recognition of a tax benefit of $141 million, net of minority interest, or
 $.08 per diluted share, from the resolution of the Company's federal income
 tax audit for the years 1997 through May 4, 2000.  Excluding this tax benefit,
 first quarter 2004 net earnings were $570 million, or $.33 per diluted share.
     Viacom's free cash flow for the first quarter of 2004 increased 38% to
 $817 million from $592 million for the same prior-year period.  The increase
 in free cash flow was principally due to revenue growth and changes in working
 capital, partially offset by higher cash taxes and capital expenditures versus
 the first quarter of 2003.  Free cash flow reflects the Company's net cash
 flow from operating activities of $929 million less capital expenditures of
 $112 million.
     Sumner M. Redstone, Chairman and Chief Executive Officer of Viacom, said,
 "Viacom's results for the first quarter put the Company on a fast track for
 another record year in 2004.  We are off to a great start with growth in every
 important metric.  We generated impressive revenue gains across all of our
 core businesses.  Viacom's bottom line results for the first quarter were
 equally robust, with operating income growth of 20% and, excluding the tax
 benefit, a gain in net earnings of nearly 30%.  These results, combined with
 our continuing ability to generate significant cash flow, which totaled an
 all-time first quarter record of $817 million, puts Viacom in a great position
 to produce escalating returns for shareholders by growing our core businesses,
 internally and externally, purchasing our shares and paying a dividend.
 Viacom's divestiture of Blockbuster would further refine our focus on the core
 assets that hold the greatest promise for our future."
     Mel Karmazin, President and Chief Operating Officer of Viacom, said, "Our
 best-ever first quarter results highlight Viacom's ability to grow revenues,
 pick up market share and maximize our leading positions in the fastest growing
 advertiser-supported media businesses.  Equally important, we demonstrated our
 superior capability to leverage this growth into strong bottom-line results,
 while continuing to expand our margins.  Our overall advertising revenues in
 the first quarter grew 21%, paced largely by the extraordinary gains in our
 Cable Networks and Television segments, which are hitting on all cylinders as
 they enter the upfront ad sales season.  Programming investments are clearly
 paying off as ratings gains drove first quarter revenue increases in Cable
 Networks and Television of 21% and 18%, respectively, and resulted in
 respective operating income gains of 24% and 38%.  Our Radio and Outdoor
 operations also turned in revenue increases, a significant and positive
 indicator of the building revival of local advertising in key markets.
 Advertising is a great business, with excellent growth prospects in 2004 and
 well beyond.  In the near term, we have the 2004 elections and the tightening
 of demand for advertising caused by the Summer Olympics, as well as the
 strengthening economic environment.  In the long term, we see an escalating
 need for companies to use advertising to introduce new products and create and
 maintain strong brands in an increasingly competitive and crowded
 marketplace."
 
     Business Outlook
     The Company continues to believe it is on track to deliver full year 2004
 revenue growth of 5% to 7%, operating income growth of 12% to 14% and earnings
 per share growth of 13% to 15%.  Operating income and EPS guidance excludes
 the 2003 non-cash charge related to Blockbuster and the 2004 tax benefit from
 the resolution of the Company's federal income tax audit.
 
     Consolidated and Segment Results (First Quarter 2004 versus First Quarter
 2003)
     The following table sets forth the revenue sources of the Company and the
 percentage that each type contributes to consolidated revenues for the first
 quarter of 2004 and 2003.
 
 
                                    Percentage of Total Revenues
                                               First Quarter
     Revenues by Type                        2004           2003
 
     Advertising sales                        48%            44%
     Rental/retail sales                      22             25
     Affiliate fees                            9             10
     TV license fees                           6              6
     Feature film exploitation                 7              7
     Other                                     8              8
     Total                                   100%           100%
 
 
     Advertising sales are primarily generated from the Company's Cable
 Networks, Television, Radio and Outdoor segments.  Rental/retail sales are
 generated by Blockbuster through its rental operations and retail sales of
 DVDs, videocassettes (VHS) and games. Affiliate fees are principally generated
 from Cable Networks and license fees are generated from the Television
 segment.  Feature film exploitation reflects revenues from the Entertainment
 segment.  Other primarily includes revenues from publishing, theme park
 operations, movie theaters and consumer products.
     The following tables present Viacom's revenues, operating income and
 depreciation and amortization for the first quarter of 2004 and 2003 by
 segment (dollars in millions).
 
 
                                                  First Quarter        Better/
     Revenues                                    2004        2003     (Worse)%
 
     Cable Networks                          $1,407.7    $1,168.2       21%
     Television                               2,272.7     1,924.5       18
     Radio                                      455.1       443.8        3
     Outdoor                                    403.3       378.3        7
     Entertainment                              851.6       798.2        7
     Video                                    1,503.1     1,517.8       (1)
     Eliminations                              (121.1)     (180.0)      33
         Total Revenues                      $6,772.4    $6,050.8       12%
 
 
                                                  First Quarter        Better/
     Operating Income                            2004        2003     (Worse)%
 
     Cable Networks                            $535.5      $432.2       24%
     Television                                 335.7       242.6       38
     Radio                                      199.2       190.6        5
     Outdoor                                     13.8        25.4      (46)
     Entertainment                               33.4        21.5       55
     Video                                      124.9       148.7      (16)
     Corporate expenses                         (36.5)      (30.1)     (21)
     Residual costs                             (28.4)      (36.6)      22
     Eliminations                                 1.9        (7.5)     N/M
         Total Operating Income              $1,179.5      $986.8       20%
 
     N/M - Not meaningful
 
                                                  First Quarter        Better/
     Depreciation and Amortization               2004        2003     (Worse)%
 
     Cable Networks                             $57.5       $47.7      (21)%
     Television                                  35.4        37.0        4
     Radio                                        7.3         6.9       (6)
     Outdoor                                     54.2        52.2       (4)
     Entertainment                               31.9        29.9       (7)
     Video                                       59.6        61.7        3
     Corporate expenses                           5.6         5.8        3
         Total Depreciation and Amortization   $251.5      $241.2       (4)%
 
     Cable Networks (MTV Networks, including MTV, VH1, Nickelodeon/Nick at
 Nite, TV Land, Spike TV, CMT and Comedy Central; BET; and Showtime Networks
 Inc.)
     For the quarter, Cable Networks revenues increased 21% to $1.4 billion
 from $1.2 billion and operating income increased 24% to $536 million from
 $432 million.  Comedy Central, which was acquired in May 2003, contributed 9%
 to Cable Networks revenue growth and 10% to operating income growth for the
 quarter.  The revenue increases were driven by higher advertising, affiliate
 fees and ancillary revenues.  Cable Networks advertising revenues grew 33% led
 by growth of 35% at MTV Networks and 16% at BET.  Cable Networks affiliate
 fees grew 9% as increases at MTVN and BET were partially offset by a 1%
 decline at Showtime.  Ancillary revenues were up 25% over the prior-year
 quarter primarily reflecting higher contributions from the licensing of
 Nickelodeon home video and consumer products.
 
     Television (CBS and UPN Television Networks and Stations; Television
 Production and Syndication)
     For the quarter, Television revenues increased 18% to $2.3 billion from
 $1.9 billion, and operating income increased 38% to $336 million from $243
 million.  CBS and UPN Networks combined delivered 26% higher advertising
 revenues principally driven by the telecast of Super Bowl XXXVIII, the NCAA
 Men's Basketball Championship and the strength of CBS primetime.  The Stations
 group advertising revenues increased 14%, benefiting from the major sports
 events on CBS during the first quarter, higher advertising revenues from key
 industries (automotive, leisure and media, and transportation) as well as
 higher political spending.  Higher syndication revenues principally reflected
 increased revenues from Everybody Loves Raymond and higher barter revenues
 from The Oprah Winfrey Show and The Dr. Phil Show.  Syndication revenues also
 benefited from the renewal of an international licensing agreement for Star
 Trek: The Next Generation, Star Trek: Voyager and Star Trek: Deep Space Nine.
 
     Radio (Radio Stations)
     For the quarter, Radio revenues increased 3% to $455 million from $444
 million and operating income increased 5% to $199 million from $191 million.
 The revenue and operating income increases reflect 3% higher advertising
 revenues driven by local advertising spending.  The Company's top 10 radio
 markets, paced by New York, Los Angeles, San Francisco and Boston, grew
 revenues 6%.  Expenses increased 1% principally due to higher employee and
 contractual compensation increases.
 
     Outdoor (Outdoor Advertising Properties)
     For the quarter, Outdoor revenues increased 7% to $403 million from $378
 million while operating income decreased 46% to $14 million from $25 million.
 First quarter revenues, historically the lowest quarter of the year, were
 higher principally due to stronger sales in Europe and Canada as well as the
 impact of favorable exchange rates, partially offset by continuing softness in
 billboards in Mexico and U.S. transit.  Operating results for the first
 quarter of 2004 reflected higher fixed costs and the unfavorable effect of
 foreign exchange on expenses.
 
     Entertainment (Paramount Pictures, Simon & Schuster, Famous Players,
 Paramount Parks and Famous Music Publishing)
     For the quarter, Entertainment revenues increased 7% to $852 million from
 $798 million principally reflecting higher Features, Theaters and Publishing
 revenues.  The increase in Features revenues was primarily due to growth in
 worldwide DVD sales led by domestic contributions from School of Rock and The
 Fighting Temptations partially offset by lower worldwide VHS sales.  In
 addition, Features revenues benefited from higher feature film license
 revenues from cable and broadcast networks and included a benefit from
 favorable foreign currency translation.  Domestic theatrical revenues were
 lower compared with the prior year which included contributions from How To
 Lose A Guy In 10 Days.  Theaters revenues benefited from favorable foreign
 currency translation.  Publishing's top-selling titles included Nighttime Is
 My Time and The Second Time Around both by Mary Higgins Clark, Angels and
 Demons by Dan Brown and Against All Enemies by Richard Clarke.  Entertainment
 operating income of $33 million increased 55% from $22 million.
 
     Video (Blockbuster)
     For the quarter, Video revenues decreased 1% to $1.5 billion versus the
 same prior-year period and operating income decreased 16% to $125 million from
 $149 million.  Operating results for the quarter were affected by unfavorable
 quarter-over-quarter comparisons in the home video release schedule.
 Worldwide same store sales decreased 7.0% with domestic down 10.2% and
 international up 2.8%.  Blockbuster added 86 domestic and 188 international
 company-owned and franchise stores since the first quarter of 2003.  Operating
 income reflected higher costs to support store expansion and three major
 growth initiatives for 2004: rental subscription programs, both in-store and
 online; movie and game trading; and the continued expansion of a store-in-
 store game concept.
     As previously announced, the Company's Board of Directors has authorized
 the Company to pursue the divestiture of Viacom's approximately 81.5% interest
 in Blockbuster, based on the conclusion that Blockbuster would be better
 positioned as a company completely independent of Viacom.  The Company
 anticipates that the divestiture would be achieved through a tax-free split-
 off, but will also continue to consider other alternatives.  The transaction
 is subject to further approval of the Viacom Board and an assessment of market
 conditions.  The split-off, which would result in a reduction of Viacom's
 outstanding shares, is expected to be completed by mid-2004.
 
     Corporate Expenses
     For the quarter, Corporate expenses, including depreciation, increased to
 $37 million from $30 million.  The increase for the quarter was due to
 increases in directors' and officers' insurance premiums and professional
 fees.
 
     Residual Costs
     Residual costs primarily include pension and postretirement benefit costs
 for benefit plans retained by the Company for previously divested businesses.
 For the quarter, residual costs decreased to $28 million from $37 million.
 The decrease in residual costs was primarily due to higher plan asset
 performance partially offset by actuarial losses from a lower discount rate.
 
     Eliminations
     Eliminations primarily reflect the timing of intercompany transactions
 from the sale of television product to Cable Networks and the sale of feature
 films to cable and broadcast networks and the Video segment.
 
     Provision for Income Taxes
     For the first quarter of 2004, the Company's effective income tax rate
 decreased to 25.8% from 40.8% in the first quarter of 2003 principally due to
 the resolution of the Company's federal income tax audit for the years 1997
 through May 4, 2000.  Excluding this tax benefit, the effective tax rate was
 40.7% for the first quarter of 2004.
 
     Cumulative Effect of Change in Accounting Principle
     Effective January 1, 2003, the Company adopted SFAS No. 143 "Accounting
 for Asset Retirement Obligations" which required the capitalization of the
 fair value of legal obligations for asset retirement costs as part of the
 total cost of the related long-lived asset and the subsequent allocation of
 such costs over the estimated life of the asset using a systematic and
 rational method.  As a result of the adoption, the Company recorded a charge
 of $19 million reflected as a cumulative effect of a change in accounting
 principle in the statement of operations for the three months ended March 31,
 2003.
 
     Other Matters
     For the quarter, on a trade date basis, the Company purchased
 approximately 8.9 million shares of its Class B Common Stock for approximately
 $367 million under its stock purchase program.  For the quarter ended March
 31, 2003, the Company had purchased approximately 3.4 million shares of its
 Class B Common Stock for approximately $142 million.  From April 1 through
 April 16, 2004, the Company purchased an additional 3.4 million shares for
 approximately $138 million, leaving $1.4 billion remaining under the current
 $3.0 billion purchase program.  For the comparable prior-year April period,
 the Company did not purchase any shares of its Class B Common Stock.  Also, in
 order to maintain Viacom's consolidated tax position with Blockbuster, the
 Company purchased approximately 123,000 shares of Blockbuster Class A Common
 Stock for approximately $2.2 million during the first quarter of 2004.  From
 April 1 through April 16, 2004, there were no additional purchases of
 Blockbuster Class A Common Stock.
     On January 28, 2004, Viacom's Board of Directors declared a quarterly cash
 dividend of $.06 per share to stockholders of record at the close of business
 on February 27, 2004, and approximately $104 million was paid to these
 stockholders on April 1, 2004.
 
     Viacom is a leading global media company, with preeminent positions in
 broadcast and cable television, radio, outdoor advertising, and online.  With
 programming that appeals to audiences in every demographic category across
 virtually all media, the company is a leader in the creation, promotion, and
 distribution of entertainment, news, sports, music, and comedy.  Viacom's
 well-known brands include CBS, MTV, Nickelodeon, Nick at Nite, VH1, BET,
 Paramount Pictures, Infinity Broadcasting, Viacom Outdoor, UPN, TV Land,
 Comedy Central, CMT: Country Music Television, Spike TV, Showtime,
 Blockbuster, and Simon & Schuster.  More information about Viacom and its
 businesses is available at www.viacom.com.
 
     Cautionary Statement Concerning Forward-looking Statements
     This news release contains both historical and forward-looking statements.
 All statements, including Business Outlook, other than statements of
 historical fact are, or may be deemed to be, forward-looking statements within
 the meaning of section 27A of the Securities Act of 1933 and section 21E of
 the Securities Exchange Act of 1934.  These forward-looking statements are not
 based on historical facts, but rather reflect the Company's current
 expectations concerning future results and events.  Similarly, statements that
 describe our objectives, plans or goals are or may be forward-looking
 statements.  These forward-looking statements involve known and unknown risks,
 uncertainties and other factors that are difficult to predict and which may
 cause the actual results, performance or achievements of the Company to be
 different from any future results, performance and achievements expressed or
 implied by these statements.  These risks, uncertainties and other factors
 include, among others: advertising market conditions generally; changes in the
 public acceptance of the Company's programming; changes in technology and its
 effect on competition in the Company's markets; changes in the Federal
 Communications laws and regulations; the impact of piracy on the Company's
 products; consumer demand for VHS, DVD and video games, and the mix between
 rental and sales volume and competitive conditions in these markets; that the
 Company may determine for market or other reasons not to effectuate the
 divestiture of Blockbuster; that a split-off of Blockbuster, if it does occur,
 may be taxable; and other domestic and global economic, business, competitive
 and/or regulatory factors affecting the Company's businesses generally; and
 other factors described in the Company's previous news releases and filings
 made by the Company with the Securities and Exchange Commission including but
 not limited to the Company's Form 10-K for the period ended December 31, 2003.
 The forward-looking statements included in this document are made only as of
 the date of this document, and, under section 27A of the Securities Act and
 section 21E of the Exchange Act, we do not have any obligation to publicly
 update any forward-looking statements to reflect subsequent events or
 circumstances.
 
 
      VIACOM INC. AND SUBSIDIARIES
      CONDENSED STATEMENTS OF OPERATIONS
      (Unaudited; all amounts, except per share amounts, are in millions)
 
                                                          Three Months Ended
                                                                March 31,
                                                           2004          2003
 
     Revenues                                          $6,772.4      $6,050.8
 
     Operating income                                   1,179.5         986.8
        Interest expense                                 (184.5)       (193.5)
        Interest income                                     5.4           3.7
        Other items, net                                  (11.6)         12.4
     Earnings before income taxes                         988.8         809.4
        Provision for income taxes                       (254.8)       (330.2)
        Equity in loss of affiliated
         companies, net of tax                             (2.1)            -
        Minority interest, net of tax                     (21.4)        (17.6)
     Net earnings before cumulative effect
      of change in accounting principle                   710.5         461.6
        Cumulative effect of change in accounting
         principle, net of minority interest and tax          -         (18.5)
     Net earnings                                        $710.5        $443.1
     Basic earnings per common share:
        Net earnings before cumulative effect
         of change in accounting principle                 $.41          $.26
        Cumulative effect of change
         in accounting principle, net                        $-         $(.01)
        Net earnings                                       $.41          $.25
     Diluted earnings per common share:
        Net earnings before cumulative effect
         of change in accounting principle                 $.41          $.26
        Cumulative effect of change
         in accounting principle, net                        $-         $(.01)
        Net earnings                                       $.41          $.25
     Weighted average number of common shares outstanding:
        Basic                                           1,731.0       1,745.9
        Diluted                                         1,744.5       1,761.1
     Dividends per common share                            $.06             -
 
 
      VIACOM INC. AND SUBSIDIARIES
      SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
      (Unaudited; Dollars in millions)
 
     The following tables set forth the Company's Operating Income before
 Depreciation and Amortization for the three months ended March 31, 2004 and
 2003.  The Company defines "Operating Income before Depreciation and
 Amortization" as net earnings adjusted to exclude the following line items
 presented in its Statement of Operations: Cumulative effect of change in
 accounting principle, net of minority interest and tax; Minority interest, net
 of tax; Equity in earnings (loss) of affiliated companies, net of tax;
 Provision for income taxes; Other items, net; Interest income; Interest
 expense; and Depreciation and amortization.  While this non - GAAP measure has
 been relabeled to more accurately describe in the title the method of
 calculation of the measure, the actual method of calculating the measure now
 labeled Operating Income before Depreciation and Amortization is unchanged
 from the method previously used to calculate the measure formerly labeled
 EBITDA in prior disclosures.
     The Company uses Operating Income before Depreciation and Amortization,
 among other things, to evaluate the Company's operating performance, to value
 prospective acquisitions and as one of several components of incentive
 compensation targets for certain management personnel, and this measure is
 among the primary measures used by management for planning and forecasting of
 future periods.  This measure is an important indicator of the Company's
 operational strength and performance of its business because it provides a
 link between profitability and operating cash flow.  The Company believes the
 presentation of this measure is relevant and useful for investors because it
 allows investors to view performance in a manner similar to the method used by
 the Company's management, helps improve their ability to understand the
 Company's operating performance and makes it easier to compare the Company's
 results with other companies that have different financing and capital
 structures or tax rates.  In addition, this measure is also among the primary
 measures used externally by the Company's investors, analysts and peers in its
 industry for purposes of valuation and comparing the operating performance of
 the Company to other companies in its industry.
     Since Operating Income before Depreciation and Amortization is not a
 measure of performance calculated in accordance with GAAP, it should not be
 considered in isolation of, or as a substitute for, net earnings (loss) as an
 indicator of operating performance.  Operating Income before Depreciation and
 Amortization, as the Company calculates it, may not be comparable to similarly
 titled measures employed by other companies.  In addition, this measure does
 not necessarily represent funds available for discretionary use, and is not
 necessarily a measure of the Company's ability to fund its cash needs.  As
 Operating Income before Depreciation and Amortization excludes certain
 financial information compared with net earnings (loss), the most directly
 comparable GAAP financial measure, users of this financial information should
 consider the types of events and transactions which are excluded.  As required
 by the SEC, the Company provides below reconciliations of Total Operating
 Income before Depreciation and Amortization to net earnings (loss) and
 Operating Income before Depreciation and Amortization for each segment to such
 segment's operating income, the most directly comparable amounts reported
 under GAAP.
 
 
      VIACOM INC. AND SUBSIDIARIES
      SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
      (continued)
      (Unaudited; Dollars in millions)
 
 
                                       Three Months Ended March 31, 2004
                          Operating Income (Loss)
                            before Depreciation   Depreciation     Operating
                             and Amortization   and Amortization  Income (Loss)
 
     Cable Networks                $593.0             $57.5           $535.5
     Television                     371.1              35.4            335.7
     Radio                          206.5               7.3            199.2
     Outdoor                         68.0              54.2             13.8
     Entertainment                   65.3              31.9             33.4
     Video                          184.5              59.6            124.9
     Corporate expenses             (30.9)              5.6            (36.5)
     Residual costs                 (28.4)               --            (28.4)
     Eliminations                     1.9                --              1.9
        Total                    $1,431.0            $251.5         $1,179.5
 
 
                                       Three Months Ended March 31, 2003
                          Operating Income (Loss)
                            before Depreciation   Depreciation     Operating
                             and Amortization   and Amortization  Income (Loss)
     Cable Networks                $479.9             $47.7           $432.2
     Television                     279.6              37.0            242.6
     Radio                          197.5               6.9            190.6
     Outdoor                         77.6              52.2             25.4
     Entertainment                   51.4              29.9             21.5
     Video                          210.4              61.7            148.7
     Corporate expenses             (24.3)              5.8            (30.1)
     Residual costs                 (36.6)               --            (36.6)
     Eliminations                    (7.5)               --             (7.5)
        Total                    $1,228.0            $241.2           $986.8
 
 
                                                   Three Months Ended March 31,
                                                          2004           2003
 
     Total operating income before
      depreciation & amortization                     $1,431.0      $1,228.0
        Depreciation and amortization                    251.5         241.2
     Operating income                                  1,179.5         986.8
        Interest expense                                (184.5)       (193.5)
        Interest income                                    5.4           3.7
        Other items, net                                 (11.6)         12.4
     Earnings before income taxes                        988.8         809.4
        Provision for income taxes                      (254.8)       (330.2)
        Equity in loss of affiliated
         companies, net of tax                            (2.1)           --
        Minority interest, net of tax                    (21.4)        (17.6)
     Net earnings before cumulative effect
      of change in accounting principle                  710.5         461.6
     Cumulative effect of change in accounting
      principle, net of minority interest and tax           --         (18.5)
        Net earnings                                    $710.5        $443.1
 
 
      VIACOM INC. AND SUBSIDIARIES
      SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
      (continued)
      (Unaudited; Dollars in millions)
 
     Free cash flow reflects the Company's net cash flow from operating
 activities less capital expenditures.  The Company uses free cash flow, among
 other measures, to evaluate its operating performance.  Management believes
 free cash flow provides investors with an important perspective on the cash
 available to service debt, make strategic acquisitions and investments,
 maintain its capital assets, satisfy its tax obligations and fund ongoing
 operations and working capital needs.  As a result, free cash flow is a
 significant measure of the Company's ability to generate long term value.  It
 is useful for investors to know whether this ability is being enhanced or
 degraded as a result of the Company's operating performance.  The Company
 believes the presentation of free cash flow is relevant and useful for
 investors because it allows investors to view performance in a manner similar
 to the method used by management.  In addition, free cash flow is also a
 primary measure used externally by the Company's investors, analysts and peers
 in its industry for purposes of valuation and comparing the operating
 performance of the Company to other companies in its industry.
     As free cash flow is not a measure of performance calculated in accordance
 with GAAP, free cash flow should not be considered in isolation of, or as a
 substitute for, net earnings (loss) as an indicator of operating performance
 or net cash flow provided by operating activities as a measure of liquidity.
 Free cash flow, as the Company calculates it, may not be comparable to
 similarly titled measures employed by other companies.  In addition, free cash
 flow does not necessarily represent funds available for discretionary use and
 is not necessarily a measure of the Company's ability to fund its cash needs.
 As free cash flow deducts capital expenditures from net cash flow provided by
 operating activities, the most directly comparable GAAP financial measure,
 users of this financial information should consider the types of events and
 transactions which are not reflected.  The Company provides below a
 reconciliation of free cash flow to the most directly comparable amount
 reported under GAAP, net cash flow provided by operating activities.
     The following table presents a reconciliation of the Company's net cash
 flow provided by operating activities to free cash flow:
 
 
                                                         Three Months Ended
                                                              March 31,
                                                         2004           2003
     Net cash flow provided by operating activities    $928.6         $699.4
     Less capital expenditures                          112.0          107.9
     Free cash flow                                    $816.6         $591.5
 
     The following table presents a summary of the Company's cash flows:
 
                                                         Three Months Ended
                                                              March 31,
                                                         2004           2003
     Net cash flow provided by operating activities    $928.6         $699.4
     Net cash flow used for investing activities      $(133.6)       $(159.6)
     Net cash flow used for financing activities      $(586.4)       $(507.1)
 
 
      VIACOM INC. AND SUBSIDIARIES
      SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
      (continued)
      (Unaudited; Dollars in millions)
 
     For the three months ended March 31, 2004, the Company reported net
 earnings and earnings per share adjusted to exclude the resolution of federal
 income tax audit for the years 1997 through May 4, 2000 as reconciled below.
 The Company believes that adjusting its financial results for this non-
 recurring tax benefit provides investors with a clearer perspective on the
 current underlying financial performance of the Company.
     For 2003, the Company reported operating income, net earnings (before
 cumulative effect of change in accounting principle) and diluted earnings per
 share excluding the impairment of goodwill and other long-lived assets
 pursuant to SFAS No. 142 "Goodwill and Other Intangibles" and SFAS No. 144
 "Accounting for the Impairment or Disposal of Long-Lived Assets."  The Company
 believes that adjusting its financial results for a non-cash charge ("2003
 Blockbuster charge") related to a reduction in Blockbuster's goodwill and
 other long-lived assets provides investors with a clearer perspective on the
 current underlying operating performance of the Company.  Management uses
 operating income excluding the charge as an internal measure of business
 operating performance.
 
                                                                         2004
                             Three Months Ended  Twelve Months Ended   Business
                               March 31, 2004     December 31, 2003    Outlook
 
     Operating income             $1,179.5             $3,625.8
 
     2003 Blockbuster charge            --              1,304.9
     Operating income,
      excluding the charge        $1,179.5             $4,930.7       12% - 14%
 
     Net earnings before
      cumulative effect of change
      in accounting principle     $  710.5             $1,435.4
 
     Adjustments to reconcile net
      earnings to adjusted net earnings:
     Resolution of federal
      income tax audit, net
      of minority interest          (140.8)                  --
     2003 Blockbuster charge,
      net of minority
      interest and taxes                --              1,015.3
     Adjusted net earnings        $  569.7             $2,450.7
 
     Reconciliation of diluted
      EPS to adjusted EPS:
     Net earnings before
      cumulative effect of change
      in accounting principle     $    .41             $    .82
     Resolution of federal income
      tax audit, net of
      minority interest           $   (.08)            $     --
     2003 Blockbuster charge,
      net of minority
      interest and taxes          $     --             $    .58
 
     Adjusted EPS                 $    .33             $   1.39       13% - 15%
 
 

SOURCE Viacom Inc.

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