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Viacom sees more strength in web advertising

Viacom Inc. is making the majority of its digital revenue from advertising sales and expects branded advertising to continue to be a major driver of growth, Chief Executive Philippe Dauman said on Monday.

While the company is pursuing multiple strategies for capitalizing on use of its entertainment over the Web, mobile phones and other platforms, Internet advertising is still the strongest segment compared with subscriptions or download revenue, Dauman told the Reuters Global Technology, Media and Telecoms Summit in New York.

"There will be many forms of distribution coexisting at the same time," Dauman said. "By and large, though, I would say the bulk of our activity today and the bulk of the activity that is being monetized is advertising sales and we see tremendous potential in advertising sales on the Internet as well as mobile platforms."

Viacom has set its sights on doubling its digital revenue in 2007 from a year ago to the $500 million level, helped by Web extensions of its popular Comedy Central, Nickelodeon and MTV shows on cable television.

"We are big believers in branded advertising," Dauman said. "We have tremendous strength in that area and we expect that to be a major driver of revenue."

The company, which owns the MTV Network and Paramount film studios, also makes its programming available for download sales in Apple Inc.'s iTunes service and has struck a paid search deal with Yahoo Inc.

But despite months of negotiations, Viacom was unable to reach an amicable deal with Web search leader Google Inc. and its popular video sharing site YouTube, which it sued in March for allowing users to upload its copyrighted entertainment onto the Web without permission.

With online video expected to be a main driver of growth in the next few years, traditional media companies have sought to challenge YouTube's lead, including a joint online venture under construction between Rupert Murdoch's News Corp. and General Electric's NBC Universal.

However, Viacom still prefers to act independently when it comes to online video deals and exploring other distribution possibilities, Dauman said.

"We decided at least at this juncture it was not the path for us to go," he said of the News Corp-NBC venture. "We felt that it was better for us to distribute our content directly through various distribution channels."

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