Viacom, owner of cable networks MTV and Nickelodeon, surged in trading after the company doubled its stock buyback program to $20 billion — more than half its market value — and posted higher-than-estimated sales.
The shares gained 6.5 percent to $79.17 at the close in New York, the biggest one-day gain in almost two years. The bonds fell, meanwhile, as ratings companies downgraded Viacom’s debt.
In addition to the repurchases, a 6 percent gain in fiscal third-quarter ad sales was “a positive surprise,” according to Todd Juenger, an analyst at Sanford C. Bernstein & Co.
Licensing fees paid by cable and satellite systems also rose, increasing 28 percent in the period. Viacom expects the fees to rise in the high “single-digit” percentages in the September quarter, with advertising revenue climbing 6 percent or higher.
The New York-based company, which relies on its TV business for more than 90 percent of annual operating income, is benefiting from steady gains in affiliate fees from pay-TV systems that carry Viacom’s networks.