CBS 3Q Results Helped by TV Shows

LOS ANGELES – The sale of popular TV shows partly offset a drop in third-quarter advertising revenue at CBS Corp. (CBS) but the company said ad trends are improving in the final three months of the year.

"The light at the end of the tunnel continues each day to get brighter," Sumner Redstone, the executive chairman and controlling shareholder at CBS, told analysts on a conference call Thursday. "As the economy recovers, CBS will be a leading beneficiary in the upturn."

CBS, which is based in New York, posted net income of $208 million, reversing a $12.5 billion loss a year ago in a quarter that was marred by impairment charges.

Adjusted for one-time items, the earnings came to 25 cents per share, cruising past analyst expectations for 22 cents per share.

Revenue fell less than 1 percent to $3.35 billion, also handily beating forecasts of $3.20 billion.

Sales of shows "Medium," "Criminal Minds," "Ghost Whisperer," "Everybody Hates Chris," and "Numb3rs," to other networks as well as rate increases for pay-TV service Showtime more than offset a 5 percent drop in advertising sales.

Total television revenue grew 9 percent to $2.27 billion but revenues at its radio stations, outdoor billboards and online sites fell.

Chief Executive Leslie Moonves said prices for spot TV ads in the fourth quarter were up 25 percent compared to the early buying period for the fall season known as the "upfronts."

Because the company held back ad inventory earlier to get higher prices, spot ads will make up about 35 percent of the inventory in the current quarter. Along with price increases, spot ad revenue will double in the fourth quarter compared to a year ago, Moonves said.

"It will affect the fourth-quarter network revenue in a very positive way, and it is not insignificant," Moonves said.

The company maintained its outlook for the fiscal year for operating income before depreciation and amortization to fall between $1.73 billion and $1.93 billion.

CBS is also renegotiating agreements with cable and satellite operators so it is paid when they carry the CBS network signal or feeds from its local stations.

Moonves said such deals should add "hundreds of millions of dollars to revenues annually" and make the broadcast business more like cable channels, which reap advertising and earn monthly fees ultimately paid by consumers.

Source: Reuters

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