UPDATE 2-Viacom declares first dividend, buying back stock

* Viacom declares its first dividend

* Unveils $4 billion stock repurchase program

* Shares up 3.6 pct; among top media stocks in 2009 (Adds analyst comment, stock history, background)

By Jennifer Saba

NEW YORK, June 9 (Reuters) - Viacom Inc VIAb.N declared its first quarterly dividend on Wednesday and reinstated a stock repurchase program, addressing questions about how it would invest its extra cash.

Viacom, the only major U.S. media company that had not been paying a dividend, set a quarterly dividend of 15 cents a share.

The owner of film studio Paramount Pictures along with cable TV networks such as MTV and Comedy Central also announced plans to buy back up to $4 billion of its stock. It suspended its repurchase program in early 2009.

The moves return some of its cash to shareholders after several quarters of improving results.

Alan Gould, an analyst with Soleil Gould Research, said the size of the repurchase program came as a surprise -- representing almost 20 percent of company's stock market value. He added that the dividend was also more generous than he expected.

The dividend is the first Viacom has paid as a standalone company following its split with CBS Corp (CBS.N) in 2006. At the time, Sumner Redstone, who still controls both companies, wanted to separate out the Viacom's faster-growing cable networks and films division from the slower-growing CBS TV and radio and radio operations.

The idea was that those seeking dividends and who are attracted to higher cash flows drawn to CBS. The company has regularly paid a dividend ever since, though it was forced to cut it back sharply in early 2009 amid concerns about the company's financial position in the credit crises.

Analysts and investors have recently said Viacom could also start paying a dividend, citing its improving results, strong balance sheet and lack of suitable acquisition targets.

In its most recent quarterly call with analysts, Viacom executives said a dividend and buyback were under consideration, helping underpin shares.

Following Wednesday's announcement, shares of Viacom were up nearly 3.5 percent on the New York Stock Exchange. So far this year, Viacom shares are up 9.5 percent, outpacing both the Standard & Poor's 500 and media rivals like News Corp (NWSA.O), Walt Disney Co (DIS.N) and Time Warner (TWX.N).

Viacom said the dividend would be payable for both Class A and Class B shareholders on July 1, 2010. (Reporting by Jennifer Saba; Editing by Derek Caney)