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Another write-down pushes CBS to loss

October 31, 2008|Meg James | James is a Times staff writer.

CBS Corp. on Thursday reported a $12.5-billion third-quarter loss after slashing the book value of its billboards and radio and television stations.

The broadcasting company's results underscored the trouble facing traditional media companies operating in a worsening economy. CBS and others that own local stations have been particularly hard-hit as advertisers, including car dealers and retailers, have dramatically curbed spending.

For the quarter ended Sept. 30, CBS reported a loss of $18.58 a share, compared with a profit of 49 cents a share last year.

"Clearly this is a difficult marketplace for all companies," Chief Executive Leslie Moonves told analysts in a conference call.

Dragging down CBS' results for the quarter was a $14.1-billion noncash charge taken to reflect the lower value of its advertising-supported media assets. CBS said earlier this month it would be taking the charge.

It marked the fourth write-down related to declining value of CBS assets since media mogul Sumner Redstone bought the company for nearly $50 billion in 2000.

In 2004, the company, then part of Viacom Inc., took two charges totaling $20.2 billion. In late 2005 it took another write-down of $9.5 billion. Including the latest write-down, CBS during the last four years has erased $43.8 billion in value from its books.

"That's amazing," said Michael Nathanson, media analyst with Bernstein Research. "You would have never expected to see the negative growth in the radio business over the last few years. You would have never expected to see such weakness in local television stations. And during this latest quarter, the results for the outdoor division were abysmal."

CBS' current market capitalization is $6.4 billion.

Excluding the write-down and other expenses, such as $38 million in stock-based compensation for its executives, CBS reported operating income of $290.3 million, or 43 cents a share, compared with $357.8 million, or 50 cents a share, for the same period a year ago.

That was in line with guidance that CBS provided on Oct. 10 when Redstone, the controlling shareholder, was caught in a credit crunch. Redstone's family-owned firm, National Amusements Inc., has debt agreements whose terms are tied to the share price of Viacom and CBS. When the stocks fell earlier this month, it forced Redstone to sell shares to satisfy lenders.

Some have speculated that Redstone may need to sell more shares to make an upcoming debt payment for National Amusements. But Redstone said on the conference call that he had "no intention of selling a single share of Viacom or CBS." When analysts tried to ask the 85-year-old billionaire follow-up questions, they were told he would not comment further.

For the quarter, CBS revenue climbed 3% to nearly $3.4 billion, boosted by the acquisition in June of the online CNET Networks and the cable television syndication sale of "CSI: New York."

Despite the losses, investors appeared encouraged by the results, particularly after Moonves reiterated that CBS was "committed to paying a healthy dividend." CBS shares closed up 71 cents at $9.43 a share.

David Joyce, media analyst with the Miller Tabak & Co. investment firm, said CBS' commitment to pay dividends and its plans to scale back capital expenditures in 2009 contributed to investors' favorable reaction.

"On this day, people are focusing on the positive," Joyce said.


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