CBS Corp. said second-quarter profit rose because of advertising growth at its television and radio stations, and it announced plans to triple its share-buyback program to $3 billion.
CBS' shares, though, fell 6% on fear that a slowing economy could eat at ad revenue and disenchantment by investors over a new procedure for reporting earnings. The CBS television network also continued to lose money, analysts estimated.
The company's radio stations paced the results, profiting from ad growth driven by an economy that was healthy in the first half of the year and from CBS President Mel Karmazin's greater emphasis on sales. That's offsetting its television network, which is No. 2 in prime-time ratings but can't charge high ad rates because its shows appeal mostly to older viewers.
Net income rose to $4 million, or 1 cent a diluted share, from $1 million, or a loss of 2 cents after the payment of preferred dividends, a year earlier. Revenue rose 16% to $1.48 billion, from $1.28 billion.
CBS was expected to earn 2 cents a share, according to analysts surveyed by First Call Corp. On New York Stock Exchange trading, the company's shares fell $2 to close at $31.69 in trading of 6.56 million shares, three times its three-month daily average. Earlier, the stock dipped to $31.
Meanwhile, operating cash flow missed some estimates, due mostly to higher-than-expected costs, analysts said. It rose 22% to $275 million, below the $300 million that some analysts expected.
Cash flow, or earnings before interest, taxes, depreciation and amortization, is a measure of financial performance used by investors to value media and other heavily indebted companies.
CBS shares have risen 29% in the last 12 months. To push the stock price higher, CBS on Wednesday added $2 billion to its $1-billion share repurchase program, which was announced in February. The company said it wanted to use an increasing amount of available cash to support the stock price, rewarding its shareholders.
Operating profit from the TV stations, network and cable operations, which include the Nashville Network, rose 4.5% to $69 million from $66 million. Revenue rose 14% to $1.03 billion. The CBS network had revenue of less than the $660 million forecast by some analysts.
Profit at CBS' radio business surged 29% to $146 million from $113 million, paced by a 21% increase in revenue to $456 million.
The results provide more evidence that the turnaround continues at CBS, which was bought by Westinghouse Electric Corp. in 1995. Westinghouse eventually jettisoned its industrial businesses and made a series of acquisitions in broadcasting to focus solely on radio and television.
One thing holding back CBS shares from greater gains is the performance of the network. Advertisers want CBS to provide more shows geared to the 18-49 age group they favor. Until the network's ratings improve with that group, it can't charge as much for advertising as rivals such as ABC, Fox and General Electric Co.'s NBC.
New York-based CBS is banking on the return of National Football League games this fall, after a four-year absence, to boost its appeal to younger men.
Analysts have speculated that CBS may try to sell the network, though the company maintains it has no such plans.