CBS Profit Rises
New York (Reuters) – CBS Corp <CBS.N> reported a higher-than-expected 8 percent rise in quarterly profit on Thursday, as strength in its publishing and outdoor advertising businesses overcame a depressed radio division.
CBS, which runs the most-watched U.S. television network, also said it is prepared for a strike by Hollywood screenwriters and has new programs ready for substitution if contract talks fail.
The company has been selling assets, including radio stations and TV stations, as it tries to shed lower margin properties. It has also been raising its dividend and buying back stock.
“This refocusing of our assets is well underway,” Chief Executive Les Moonves said on a conference call. “Going forward, we will continue to position ourselves for faster growth of revenues across all the emerging platforms.”
CBS’s revenue fell 3 percent to $3.28 billion in the third quarter, compared to analyst forecast of $3.36 billion, due to lower television license fees as well as the impact of radio and television station divestitures. It cautioned that revenue would be down 2 to 3 percent for the year.
Net profit was $343.3 million, or 48 cents a share, compared with $316.9 million, or 41 cents a share, a year earlier. Analysts had forecast earnings of 44 cents a share, according to Reuters Estimates.
CBS shares fell 49 cents, or 1.7 percent, to $28.21 before its results were released and were down about 9 percent in the third quarter. The stock was flat in after-hours trading.
The media company’s quarterly results come as Hollywood screenwriters and studios are locked in contract negotiations, raising the possibility of the first major strike against the film and TV industry in 20 years.
“We continue to engage in serious negotiations and hope that an agreement is reached soon. But make no mistake, we are prepared,” Moonves said.
“In the event of a strike, we’re fully prepared to offer alternative programming options, and we would anticipate no material impact on the company for the remainder of the television season,” he added.
At CBS television, which has drawn the largest TV audience for five straight years but has struggled to find a new break-out hit so far this season, revenue fell 3 percent in the latest quarter.
But TV operating income before depreciation and amortization, a key measure of media industry profitability, rose 4 percent to $476.1 million.
Moonves said spot prices for short-term advertising — known as the scatter market — have in recent months strengthened sharply from a year ago.
“In the last several months, scatter pricing continues to be way up into double digits — right now, north of 35 percent,” he said.
Like recent quarters, strong points for CBS included its outdoor advertising business, which includes billboards, and publishing, where it keeps benefiting from strong sales of the blockbuster title “The Secret.”
Outdoor revenue for the third quarter rose 3 percent to $552.2 million while OIBDA increased 8 percent to $153.5 million. Publishing revenues rose 9 percent to $214.2 million and OIBDA increased 5 percent to $23.8 million.
Radio, however, continued to hurt CBS results. The radio division has recently restructured senior management and has been experimenting with different formats in some markets.
But radio is still suffering from a weak advertising market in the quarter, and revenue from the unit fell 12 percent.
Moonves said the company “we won’t be satisfied until radio is growing its audience share, revenue and profits.”
(Reporting by Paul Thomasch)