Now that ain't workin', that's the way you do it
You play the guitar on the MTV.

That ain't workin', that's the way you do it:
Money for nothin' and your chicks for free.
I want my, I want my, I want my MTV!
-- From "Money for Nothing," by Dire Straits, from the 1985 album Brothers in Arms

Entertainment conglomerate Viacom (NYSE: VIA) (NYSE: VIA-B) reports first-quarter earnings Friday morning. Let's see what's working -- is that the way you do it?

What Fools say:
Here's how Viacom's CAPS rating stacks up against some of its peers and competitors:

Market Cap (billions)

Trailing P/E Ratio

CAPS Rating

General Electric (NYSE: GE)

$330.6

15.4

****

Walt Disney (NYSE: DIS)

$61.1

15.6

****

News Corp. (NYSE: NWS)

$55.1

16.7

****

Time Warner (NYSE: TWX)

$54.0

13.0

***

Viacom

$25.0

14.4

****

Data taken from Yahoo! Finance and Motley Fool CAPS.

Some of our CAPS players like Viacom because of the strong brands under its umbrella: Transformers, MTV, Rock Band, Comedy Central, and Indiana Jones 4 are just a few of the most commonly cited examples. The bears, on the other hand, haven't had much to say lately.

What management does:
Net margins are trending up in general, and year-over-year sales growth is steady at about 20%. Given the unpredictable nature of the entertainment industry, particularly in these times of technology-fueled upheaval in the sector, that's not an easy pair of tricks to pull off.

Margins

9/2006

12/2006

3/2007

6/2007

9/2007

12/2007

Gross

49.3%

58.1%

45.3%

45.2%

44.9%

56.8%

Operating

25.6%

25.2%

23.0%

22.8%

22.4%

22.4%

Net

11.8%

14.0%

12.5%

12.1%

13.7%

13.7%

FCF/Revenue

9.7%

18.1%

16.9%

18.7%

17.9%

11.5%

Y-O-Y Growth

9/2006

12/2006

3/2007

6/2007

9/2007

12/2007

Revenue

12.0%

19.3%

20.3%

17.8%

22.1%

18.1%

Earnings

(23.0%)

20.6%

15.6%

12.3%

28.8%

4.0%

Data courtesy of Capital IQ, a division of Standard & Poor's, and reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Since our players haven't filled the bill, let me play devil's advocate for a second and go grumpy, even though Viacom is one of my "outperform" picks in CAPS.

Some of the company's properties are indeed proven and dependable moneymakers, with a few rising stars like Rock Band thrown in for good measure. But the old cash cow MTV has become the punchline of a bad joke, far removed from Mark Knopfler's idealized music outlet of the '80s.

Here's an idea: Do something with that brand value. The traditional studio system is in shambles -- step into the breach and become the next great music distributor. Play songs on TV again, then sell the tracks along with T-shirts, autographed bowling pins, and Santana's signature strings on the side. Or, sell the whole division to someone who could manage that sort of move: money for nothing, as far as Viacom's concerned. Yeah, you're welcome.

Of course, none of that will happen before the earnings call. Rock Band continues to tear up the video game sales charts, SpongeBob dominates the cable channels, and all is well on the surface. Business as usual, move along.

Foolishness for nothin':

Walt Disney is a Motley Fool Stock Advisor recommendation, as is Time Warner. Try any of our Foolish newsletters today, free for 30 days. Or just sign up for a free CAPS account.

Fool contributor Anders Bylund holds no position in any companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is the Punxsutawney Phil of financial forecasting.