CBS Corp. posted a massive third-quarter loss on Thursday after taking a $14.12 billion charge to write down the value of media assets on its books.
But excluding the previously disclosed charge, CBS would have posted a profit. The media company also said it would have enough funds to pay its dividend and slashed capital spending. Shares of CBS rose 54 cents, or 6.2 percent, to $9.26 in early afternoon trading.
Sumner Redstone, CBS's executive chairman and controlling shareholder, tried to allay another point of concern for shareholders by repeating a pledge not to sell any more CBS shares held by his family in order to aid his privately held movie theater company National Amusements Inc.
Redstone, speaking on a conference call with analysts, said the sale earlier this month of $233 million in CBS and Viacom Inc. nonvoting stock to raise funds and avoid violating loan agreements at National Amusements wasn't what he wanted and is something he doesn't intend to do again.
Redstone said talks between National Amusements and its lenders are continuing. "I fully expect a fair and workable deal ... will be reached in a highly reasonable timeframe," Redstone said.
CBS said national advertising held up better than local ads. TV revenue rose in spite of a 12 percent decline in advertising at the network, but radio and outdoor advertising sales fell. The company also cut hundreds of jobs in the quarter.
"People are focusing on the fact that the company is curtailing spending, which helps to support their dividend," said Miller Tabak analyst David Joyce.
The New York-based company reported a loss of $12.46 billion, or $18.58 per share, compared with a profit of $343.3 million, or 48 cents per share, a year ago.
CBS said earlier this month that it would record the charge to reflect a decreased book value for its radio and TV stations. Excluding the pre-tax impairment charge, CBS posted adjusted earnings from continuing operations of $290.3 million, or 43 cents per share, compared with $357.8 million, or 50 cents, a year ago.
For the period ended Sept. 30, revenue rose 3 percent to $3.38 billion helped by the purchase of CNET Networks on June 30 and domestic cable syndication of "CSI:New York."
Analysts polled by Thomson Reuters on average forecasted earnings of 40 cents per share on revenue of $3.37 billion.
Looking ahead, CBS expects fiscal 2008 operating income, both including and excluding depreciation and amortization, to fall in the mid-teen percentages from a year ago.
"While the advertising market is difficult, we're capitalizing on our other growth opportunities," Chief Executive Leslie Moonves said on the conference call.
Moonves pointed to the purchase of CNET in particular, which helped CBS' interactive unit to swing to a $2.5 million profit from a loss, helped by strong growth in display ads. The unit, which began as a separate business with CNET on July 1, cut an undisclosed number of jobs.
Moonves also said rate and subscriber increases at Showtime Networks and CBS College Sports Network helped lift TV revenue.
He also said he was "very proud" of CBS News anchor Katie Couric's performance in the election season, with ratings increases and double-digit gains in visitors to CBSNews.com.
TV revenue, which comprise 61 percent of total revenue, rose by 2 percent in the quarter to $2.1 billion. Higher license fees, particularly from "CSI:New York", and higher home entertainment and affiliate revenue offset a 14 percent advertising decline.
Ad revenue was hurt by general softness and certain special events: The network suffered lower primetime ratings on shows that competed with NBC's Olympics and by the coverage of hurricanes Ike and Gustav, political conventions and a presidential debate with limited ads _ offset by higher political ad spending.
Operating income before depreciation and amortization fell 15 percent to $414 million.
Radio revenue fell 12 percent to $392.5 million and earnings were down 18 percent due to ad weakness and station divestiture. CBS has cut 480 radio jobs this year thus far, mostly in the third quarter.
Outdoor advertising declined 1 percent to $549.3 million, as an international acquisition and growth in China offset weakness in North America. Profit fell 26 percent in the quarter. The unit cut over 200 jobs in North America and an undisclosed number in Europe.
CBS's Simon and Schuster publishing division saw revenue rise by 5 percent to $225 million and profit increase 8 percent. Bestsellers "The War Within" by Bob Woodward and Dr. Phil McGraw's "Real Life: Preparing For the 7 Most Challenging Days of Your Life" buoyed results.
Moonves said CBS will continue to pay its dividend.
CBS said capital spending will fall slightly below $500 million this year, down from prior projections of $500 million to $550 million. In 2009, capital spending will decline even further to $350 million and closer to historical levels.
Executives said auto ads continue to be weak, but might be bottoming out. Retail advertising was mixed while telecom continues to be strong. Advertising from financial services companies is starting to pick up a bit as banks advertize about things such as name changes.
Moonves said talks over retransmission fees with cable operators continue. He said he was encouraged by Time Warner Cable Inc.'s deal with LIN TV Corp. on Wednesday, in which the cable company agreed to pay higher fees for the right to carry local broadcast stations.
"Retransmission fees will increasingly play a role as a second stream of revenue," Moonves said.