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CBS swings to third-quarter profit of $207.6 million

Strong rerun syndication sales of its television shows and an uptick in network TV advertising boost the broadcaster's results.

November 06, 2009|Meg James

There's a glimmer in the CBS eye.

Old-media giant CBS Corp. released third-quarter results Thursday that suggested the recession's clamp on the advertising market was loosening, at least at the all-important CBS TV network.

Strong rerun syndication sales of CBS' television shows, including "Criminal Minds," "Medium" and "Ghost Whisperer," and an uptick in network TV advertising helped the broadcaster swing to a profit for the quarter ended Sept. 30.

The company's net income of $207.6 million contrasts with a loss of $12.46 billion in the third quarter of 2008, when CBS recorded a charge for writing down its TV and radio stations. However, the company's radio and billboard division posted lower sales, underscoring how local advertising has yet to show signs of recovery.

Revenue of $3.35 billion was flat.

CBS' earnings of 30 cents a share beat analyst estimates of 23 cents, according to a survey by Thomson Reuters.

"There is no question that we are seeing strong evidence of a recovery right now," Chief Executive Leslie Moonves said during a conference call with analysts. "Obviously . . . we must be mindful that the economy is still somewhat volatile."

Despite continued softness in local advertising, Moonves was bullish, saying he expected CBS' TV advertising to grow this quarter and into 2010. That's because the company's marquee asset, the CBS TV network, has gotten off to a solid start for the new season, sparking demand for the network's commercial time.

Last summer, when CBS sold the bulk of its commercial inventory for the season, the economy was shaky and advertisers held down spending. As a result, CBS did not sell as much ad time in advance as it has in previous years.

The strategy of holding back commercial spots, rather than selling them at a discount, now appears to be paying off. CBS is commanding dramatically higher prices -- about 25% higher -- than it did just a few months ago.

There is so much interest, Moonves said, that CBS is reducing promotional spots so it can sell the time to paying customers.

"They are knocking down the doors," Moonves said.

Among its business units, the television segment, which includes the CBS television network, TV stations, production studio and cable channel Showtime, generated revenue of $2.3 billion for the quarter, up 9% from a year earlier.

CBS' radio chain suffered another poor quarter, with revenue down 19% to $318.9 million because of continued weakness in ad sales. The billboard division's revenue plunged 23% to $424.9 million because of sluggish sales and unfavorable foreign exchange rates.

Online group CBS Interactive reported a 15% decline in revenue to $121.3 million. It attributed the drop to "weakness in the display advertising market."


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