CBS Profit Falls 96% On Weak Advertising Market
LOS ANGELES — CBS Corp. said Thursday its second-quarter profit fell sharply because of softness in the advertising market, but said the government's "cash-for-clunkers" program helped jumpstart ad buying from auto dealers around the nation.
The New York-based broadcasting company run by Sumner Redstone offered an upbeat outlook for sales in the third quarter that gave hope that a long-awaited recovery in the advertising market has finally arrived. Its full-year outlook was unchanged.
"`Cash for clunkers' was a real shot in the arm for national as well as local," said CBS Chief Executive Leslie Moonves on a conference call. "You see an initiative like that helping and it gives you great encouragement that they see light at the end of the tunnel."
TV and radio stations were seeing ad sales bookings that were 11 percent to 16 percent higher in the second quarter than the first, the company said. In the third quarter, they improved another 4 percent to 8 percent from the second quarter.
Outgoing Chief Financial Officer Fred Reynolds called the first quarter the "rock bottom" for auto advertising, and said he expected automakers to continue to boost spending even after the end of government's incentive plan ends.
"`Cash for clunkers' got people off the couch and into the market ... but they are selling more than that," he said. "We think it's sustainable."
Analyst Anthony DiClemente of Barclays Capital said the executives were the most upbeat of any media company this quarter.
"Up until now a lot of people have looked forward to a recovery in advertising and hoped for it, but this is one call where we really heard the most optimism that we've heard yet on a tangible improvement in the ad market in the second half of '09," he said.
Despite the positive outlook, profit in the April-June quarter dropped 96 percent to $15 million, or 2 cents per share, from $408 million, or 61 cents per share, a year earlier.
Adjusted earnings, which excluded $54 million in charges for the early retirement of debt and stock-based compensation, fell to 8 cents per share from 49 cents per share a year ago. That still beat the 7 cents per share expected by analysts polled by Thomson Reuters.
Revenue dropped 11 percent to $3.01 billion from $3.39 billion, just missing analysts' $3.03 billion average estimate.
Shares of CBS rose 71 cents, or 8.3 percent, to $9.25 in after-hours trading after the results were released. Earlier, it closed the regular session down 32 cents, or 3.6 percent, at $8.54.
Quarterly television revenue fell 10 percent to $1.95 billion as ad sales fell 13 percent, offsetting the rise in subscriber fees for its Showtime pay TV channel. Radio revenue fell 23 percent to $322 million on ad weakness, and outdoor advertising sales sank 27 percent to $434 million.
Interactive revenue more than tripled to $126 million from $40 million, based on CBS' acquisition of CNet Networks Inc. for $1.8 billion in June of last year.
Publishing revenue from its Simon & Schuster book brand fell 2 percent to $181 million.
The company said it continues to expect full-year operating income before depreciation and amortization to be between $1.73 billion and $1.93 billion.
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RYAN NAKASHIMA | 08/ 6/09 06:52 PM |