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Apr-30-2008CBS Proves Life Exists Outside Of Sports(topic overview)
CONTENTS:
- CBS reported first-quarter net earnings of $244.3 million, or 36 cents a share, compared with $213.5 million, or 28 cents a share, a year earlier. (More...)
- A boost in syndication revenue, largely via new global distribution deals for "CSI," pushed profits to $244.3 million in the period ended March 31, up from $213.5 million in the year-earlier frame. (More...)
- Even without the Super bowl or March Madness, TV revenue increased one percent. (More...)
- Sales probably fell 3.3 percent to $3.54 billion, the average of 11 analysts' estimates compiled by Bloomberg. (More...)
- CBS guided for operating income before depreciation and amortization and operating income growth to be in the range of 3.0% to 5.0% based on 2007's OIBDA of $3.2 billion and operating income of $2.7 billion, excluding compensation expense. (More...)
- "There is no one, no one, that I would rather have at the helm of than Les Moonves," Redstone said in a conference call, after CBS reported a 14 percent rise in quarterly earnings. (More...)
- Radio, though, will continue to suck wind as will Publishing. (More...)
- Excluding stock-based compensation and restructuring impacts, earnings rose to 43 cents a share from 35 cents a share. (More...)
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CBS reported first-quarter net earnings of $244.3 million, or 36 cents a share, compared with $213.5 million, or 28 cents a share, a year earlier. CBS revenue was essentially flat at $3.7 billion, even though last year's first quarter included revenue from the Super Bowl and the semifinals of the NCAA Men's Basketball Tournament, two popular events which were not included in this year's results. Even without those two factors, television revenue for the first quarter of 2008 increased 1 percent to $2.60 billion from $2.57 billion, thanks to higher license fees, including an international self-distribution deal for the "CSI" crime series franchise. Its outdoor division also turned in a stronger quarter, with revenue up 7 percent to $496.9 million. The main weak spots for the media company were radio, where revenues on a same station basis decreased 6 percent, and publishing, where revenue fell 12 percent as its titles failed to match last year's blockbuster sales of "The Secret" by Rhonda Byrne. [1] Shares of CBS Corp. (NYSE: CBS ) are trading up this morning after the corporate home of CSI, Two and a Half Men and Katie Couric, reported better-than-expected first quarter results. Net income was $244.3 million, or 36 cents per share, up 14% from $213.5 million, or 28 cents, the New York-based company said in its earnings release.[2]
In a news release, Leslie Moonves, President and CEO of CBS reported that the company made $244.3 million in the first quarter of 2008 compared to $213.5 million in 2007. CBS raised its dividend from 25 cents to 27 cents per share.[3]
The fact that the company eked out a bit of earnings growth was a pleasant surprise for Wall Street. This morning, CBS reported first quarter net earnings of 36 cents a share, up from 28 cents per share a year earlier, on $3.7 billion in revenue, basically flat, even though last year's quarter included the Super Bowl and NCAA basketball, and this year's quarter didn't.[4] Revenues for the quarter were effectively flat at $3.65 billion, the company reported Tuesday before the markets opened. CBS raised its quarterly dividend 8% to 27 cents per share.[5]
Although analysts had expected results to be hampered by the labor strife, CBS said the ratings decline was more than offset by lower TV production costs and the sale of reruns for the shows "Everybody Loves Raymond" in the U.S. and "CSI: Crime Scene Investigation" abroad. CBS Chief Executive Leslie Moonves, in a call with analysts, described the results as "very solid" and said the television, radio, billboard and publishing company would boost its quarterly dividend to 27 cents a share from 25 cents despite "challenging economic times." Wall Street had been monitoring CBS' earnings because it is the first of several media companies to report results over this week and the next and is heavily reliant upon advertising. CBS derives about two-thirds of its revenue from ad sales, and a drop typically signals a slowing economy.[6] Moonves: Signs Are Positive For CBS Radio NEW YORK -- April 29, 2008: CBS Corp. President/CEO Les Moonves began this morning's earnings call by citing the company's strong overall results that, he said, "demonstrate the strength of the CBS Corporation." The company upped its quarterly dividend by 2 cents, to 27 cents per share, and Moonves said that decision is "a clear signal that we believe in the breadth of our businesses and their ability to perform in any climate, now and in the future."[7] NEW YORK, April 29 (Reuters) - CBS Corp (CBS.N: Quote, Profile, Research ) reported a greater-than-expected 14 percent rise in quarterly earnings on Tuesday, helped by healthier results from its television business, and boosted its dividend. The first-quarter report sent CBS shares up 4 percent and marked a bright spot for the company after weeks in which it has battled speculation that its TV news anchor, Katie Couric, may leave next year and that Chief Executive Les Moonves has lost favor with Chairman Sumner Redstone. Redstone sought to make clear his support for Moonves during a conference call with investors on Tuesday.[8]
NEW YORK (AP) — CBS Corp. reported a 14 percent increase in first-quarter earnings Tuesday as higher syndication sales from "CSI" made up for not having the Super Bowl broadcast this year. Its shares rose nearly 3 percent.[9] TV revenues edged up 1 percent, despite the fact that two events boosted last year's first quarter performance, the Super Bowl and the semifinals of the NCAA men's basketball tournament. The NCAA semifinals aired in the second quarter of this year but the first quarter of last year. Those factors, combined with station sales and the effects of the Hollywood writers' strike, which was settled in February, led to a 15 percent decline in TV advertising revenues, CBS said. CBS made up ground in TV with higher syndication sales of "CSI" and "Everybody Loves Raymond" and higher fees from its cable channels Showtime and the CBS College Sports Network.[9] First quarter television revenues were $2.60 billion, up 1% from $2.57 in the same quarter a year ago, largely as a result of an 85% increase in licensing fees. Those included the self-distribution deal the network made for the three series in the '''CSI''' franchise and the second cycle of the syndication of '''Everybody Loves Raymond.''' Affecting the picture for the quarter were the lack of the Super Bowl, which was a boost to first-quarter 2007 results, and the fact that the NCAA Men'''s Basketball Tournament, a first-quarter contributor in 2007, fell into the second quarter this year. CBS said those items amounted to a 10% drag on TV revenues for first quarter 2008.[5]
ANALYST TAKE: Wachovia (nyse: WB - news - people ) analyst Marci Ryvicker expects profit of 32 cents per share on revenue of $3.49 billion. She projects a 7 percent decline in television revenue because of the WGA strike and a tough comparison with the year-ago period when CBS broadcast the Super Bowl.[10] TV profits rose 13 percent, partly held back by $34.9 million in restructuring expenses. CEO Leslie Moonves told analysts on a conference call that he didn't expect current negotiations with an actors' union to result in a strike, saying the tone of the talks was "much more cordial" than those with the writers' union. Moonves also said the accelerated development season for TV shows this year forced by the writers' strike allowed CBS to save money by taking less time to shoot test versions of new programs.[9] '''There is no one that I would rather have at the CBS helm than Les Moonves,''' Mr. Redstone said. CBS Chief Financial Officer Fred Reynolds said that since advertisers tend to turn to the major TV networks when trying to get their message to the public, '''We are still seeing growth." He said he would describe the growth is slowing, but since recession means a decline, '''I don'''t think we would say we are seeing a recession.''' It also is seeing strong program sales internationally. With its stations in key states such as New York, California and Illinois, Mr. Moonves said he thinks political advertising will continue strong. Mr. Reynolds said the savings resulting from layoffs at the stations in March and from technology-related efficiencies should add up to more than $45 million in savings for the CBS-owned group this year.[11] Radio earnings before interest, taxes, depreciation and amortization probably fell 20 percent in the quarter to $131.2 million, Blackledge estimated. Sales likely dropped 8 percent to $365.7 million, he wrote. "They know they need to change their asset mix,'' said Blackledge, who is based in New York and recommends investors buy CBS shares. "They are going to do something. Now they need to figure out if it's cable networks or the Internet.''[12] The owner of the CBS television network reported first-quarter net earnings of $244.3 million, or $0.36 per share. This compared to $213.5 million, or $0.28 per share, in the same quarter last year.[13] For CBS Corp. overall, net earnings rose 14 percent, to $244.3 million from $213.5 million, with diluted earnings per share of 36 cents, up from 28 cents a year before.[14] CBS Corp. ( CBS : sentiment, chart, options ) stepped into the earnings limelight today, reporting first-quarter profit of $244.3 million, or 36 cents per share, a 14% increase from a year-ago profit of $213.5 million, or 28 cents per share.[15]
The company reported earnings of $244.3 million or 36 cents a share, beating the 33 cents predicted by analysts polled by Thomson Financial. That's up from $213.5 million or 28 cents a share a year ago.[16] Overall in the quarter, CBS posted net income of $244.3 million, or 36 cents a share, compared with $213.5 million, or 28 cents a share, a year earlier.[17] First-quarter net income rose 14.4% to $244.3 million, or 36 cents a share, from $213.5 million, or 28 cents a share, in the prior year.[18]
CBS may say that net income increased to $219.9 million, or 33 cents a share, from $213.5 million, or 28 cents, a year earlier, according to the average of nine estimates.[12]
Revenue rose 7% to $497 million, but operating income fell 6%. Helped by its cash stockpile of about $2.3 billion, CBS also raised its quarterly dividend by 8% to 27 cents a share. Its was the sixth time CBS raised its dividend since the split from Viacom Inc. (VIA VIAB) at the beginning of 2006. When the split took place, CBS pledged to return large swaths of its cash to shareholders. CBS has said it's also earmarking its cash for acquisitions in high-growth areas.[17] For the full year, CBS said it expects 3 percent to 5 percent growth in operating income and OIBDA, or operating income before depreciation and amortization, a key measure of media industry profitability. CBS raised its quarterly dividend from 25 to 27 cents per share.[1] Looking ahead, the company said it expects operating income growth between 3% and 5% for 2008, excluding stock-based compensation expense and restructuring charges. The company said it is seeing positive signs for its radio division early in the second quarter, with sales pacing up over last year in some of our larger markets. The company also raised its quarterly dividend by 8% to $0.27 per share from $0.25 per share.[13]
CBS said it expects to see growth in operating income before depreciation and amortization in the range of 3 percent to 5 percent in 2008. Separately, the company also announced it was raising its dividend from 25 cents to 27 cents per share.[19] Rate increases and subscriber growth at Showtime Networks and CBS College Sports Network boosted affiliate revenues by 6%. The company also boosted its dividend by 8% to 27 cents per share.[2] Revenue was essentially flat at $3.65 billion versus $3.66 billion a year ago, but still came in ahead of estimates of $3.55 billion. Separately, the company also announced it was raising its dividend from 25 cents to 27 cents per share.[9]
Analysts polled by Thomson Reuters expected earnings, excluding items, of 33 cents a share on revenue of $3.55 billion. CBS also reaffirmed its business outlook for 2008. The company expects earnings to grow 3% to 5% this year before depreciation and amortization, and excluding stock-options expense and restructuring charges.[17] Sales probably rose 8 percent to $2.97 billion, the analysts predict, as ratings surged at MTV and the company's other cable channels. Viacom's Class B shares, down 12 percent this year, fell $1.03, or 2.6 percent, to $38.70 on April 25 on the NYSE. It may be counter-productive for CBS and Viacom to develop competing businesses, said Elmaleh, the portfolio manager. "It's clearly double the cost as CBS builds up to make films and Viacom does the same in pay cable,'' he said. "It appears duplicative.''[12]
Paramount, Metro-Goldwyn-Mayer Inc. and Lions Gate Entertainment Corp. may not renew film deals with CBS's Showtime to start a competing premium cable channel, the studios said in an April 20 statement. While Showtime would lose movies from those studios after 2011, the network may save $350 million a year, Blackledge predicted. The savings may add to the $150 million Showtime spends on original shows, which spur new subscriptions, he said. The venture led by Paramount, a unit of Viacom Inc., would potentially pit CBS against its former parent company. Sumner Redstone, the executive chairman and largest shareholder of both companies, split Viacom and CBS in 2006 in a bid to boost the share price.[12]
Seventeen Wall Street analysts' consensus revenue estimate came in at $3.55 billion. The company said that driving its performance this quarter was significant profit improvement at its television unit, led by a new distribution arrangement for its valuable CSI franchise in international markets. Sumner Redstone, Executive Chairman of CBS, said in a statement, "The solid financial performance of CBS Corporation, in spite of a challenging economic environment, demonstrates the enduring strength of its brands and world-class assets."[13] The company's television division operating income spiked 15% higher in the most recent quarter, to $402.1 million. CBS attributes the increase to higher syndication profits, mostly due to a new international distribution arrangement for "CSI" and its spin-offs (my colleague, Mark "Horatio Wannabe" Fightmaster, would agree), as well as "Everybody Loves Raymond" selling into its second syndication cycle with Fox-owned stations.[15]
NEW YORK (AP) — CBS Corp. reported a 14 percent gain in first quarter profit Tuesday, aided by a new international TV syndication agreement for its "CSI" franchise.[19] CBS Radio Revenues Down 9 Percent In Q1 NEW YORK -- April 29, 2008: CBS Corp. on Tuesday reported revenues that were all but flat in the first quarter of 2008, at $3.654 billion, off less than 1 percent from $3.657 billion in Q1 2007.[14]
About CBS Radio -- which saw a 9 percent revenue decline in Q1 -- Moonves said that, although the radio industry faces challenges, "We're starting to see some positive signs of growth for the first time in the past several years." He continued, "The ratings progress I've been highlighting since Dan Mason began making programming changes is beginning to be monetized." In New York, Moonves said sales are tracking up 15 percent in Q2 and up 18 percent for April, and CBS Radio is looking at revenue growth for April in four of its top five markets. While Moonves cautioned that "this is only pacing information," he said it is also "a good indication that we are beginning to monetize our ratings performance, and we are encouraged about where we are headed."[7]
Moonves also pointed out that CBS Radio's online reach was more than doubled in Q1 when it made a deal to power AOL's music service. He said, "In the last few years, annual online revenue has grown from $5 million to $13 million to $30 million in '07, and this year we project to get that number to well over $50 million." Moonves noted that CBS Corp.' s Last.fm music-based community site has seen its traffic increase by more than 100 percent since it added free on-demand streaming in Q1.[7] The shares, down 30 percent in the past year, may fall until Chief Executive Leslie Moonves increases stock buybacks and raises the dividend, said Jacques Elmaleh, a portfolio manager at Steinberg Global Asset Management. "Les wants to put his stamp on the company and make a transformative change with an acquisition,'' said Elmaleh, whose Boca Raton, Florida-based firm manages about $500 million, including CBS shares. "Once he's comfortable and made that change, hopefully he'll focus on buying back shares.''[12] "There is no one, no one, that I would rather have at the helm of CBS than Les Moonves," Redstone said. He later addressed questions about any sibling rivalry between executives at CBS and Viacom Inc (VIAb.N: Quote, Profile, Research ), which he also oversees. "I believe competition is healthy, it certainly didn't hurt me," he added. "It is not true that success between these two companies is mutually exclusively." Moonves pointed out that CBS's earnings growth came during a tough economic environment, while reminding investors that the media company has raised its dividend six times in nine quarters. This latest dividend reflects an 8 percent increase.[8]
Despite the Hollywood writer's strike, CBS' TV profits rose 13 percent on account of higher earnings mainly from the syndication sales of CSI and Everybody Loves Raymond. "The solid financial performance of CBS Corporation, in spite of a challenging economic environment, demonstrates the enduring strength of its brands and world-class assets," said Sumner Redstone, CBS Executive Chairman, said in a statement.[3] April 29 (Bloomberg) -- CBS Corp., owner of the second most watched U.S. broadcast network, reported first-quarter profit rose 14 percent on sales of its "CSI'' crime series abroad. The company raised its quarterly dividend and the stock gained.[20]
New York, NY (AHN) - CBS Corp. on Tuesday revealed a 14 percent increase in profits for the first quarter and an eight percent increase in its quarterly dividends- making it one of the highest dividend payers in the industry.[3] NEW YORK (Reuters) - CBS Corp (CBS.N: Quote, Profile, Research ) reported a greater-than-expected rise in earnings on Tuesday, helped by healthier results from its television business, and boosted its dividend by 8 percent.[1] Stanford Group analyst Fred Moran had an optimistic take on the results. "It shows CBS is holding its own despite the recessionary advertising environment in the U.S," he told Bloomberg News. "The yearly dividend is now a 5 percent yield, and it's one of the cheapest stocks in the media group.'' Ratings for the network's big shows such as CSI:Miami and Two and a Half Men have rebounded since the end of the writers' strike in February, according to Bloomberg. Advertisers also will ratchet up spending to encourage people to spend their economic stimulus payments which should benefit the Television, Radio and Outdoor businesses.[2] Profit also gained after a 100-day writers strike temporarily lowered production costs. "It shows CBS is holding its own despite the recessionary advertising environment in the U.S.,'' said Fred Moran, an analyst at the Stanford Group in Boca Raton, Florida. He recommends holding CBS shares and doesn't own them. "The yearly dividend is now a 5 percent yield, and it's one of the cheapest stocks in the media group.''[20]
An industrywide slowdown in advertising, which accounts for almost two-thirds of CBS's sales, reduced revenue at TV and radio, the largest units, said John Blackledge, a JPMorgan Chase & Co. analyst. TV's sales probably fell 4.5 percent without pro football's championship game and as the college basketball finals spilled over into the current quarter, he wrote on April 15. "They didn't have a Super Bowl or a final four like they did last year, and then the strike affected sales at the network,'' Blackledge said in an interview.[12] The production halt lowered costs at CBS's TV unit by 6.1 percent in the first quarter, helping boost the network's earnings. Earnings at CBS's publishing division that includes Simon & Schuster probably fell 36 percent to $15.3 million after record sales a year earlier on best-selling titles such as "The Secret'' by Rhonda Byrne.[12]
Revenue also fell 12% to $201.6 million at publisher Simon & Schuster, where operating income sank 32% to $14.6 million. CBS, however, was buoyed by political spending at its TV stations, countering a decline in local market ad sales.[6] At CBS Radio, revenue decreased 9% to $363.5 million and operating income skidded 27% to $115 million for the quarter.[6] First-quarter revenue for CBS Outdoor increased 7% to $497 million, but operating income slipped 6% to $44.1 million.[6]
Television revenue inched up 1% to $2.6 billion, and operating income rose 15% to $402.1 million.[6]
The television unit likely will report lower revenue after the Writers Guild of America strike that ended in early February forced CBS to run more reruns. That likely cut into advertising prices and volume. It is widely expected that costs fell, though, so any negative effect on operating income may have been mitigated.[10] The gain occurred despite flat revenue of $3.65 billion, a drop in television advertising sales and a plunge in the network's prime-time ratings because of the writers strike.[6] April 28 (Bloomberg) -- CBS Corp., dethroned last month after five years as the most-watched U.S. television network, may report a drop in first-quarter sales tomorrow after viewers shunned reruns during a 100-day writers strike.[12]
Net income may have gained 3 percent as the strike eliminated costs for producing new TV shows and the company recorded tax expenses related to the sale of radio stations a year earlier.[12] Audiences at CBS, the first network to air new episodes after the walkout ended, fell 19 percent during the work stoppage, the most of any broadcast company. Moonves said he's "optimistic'' an agreement with the Screen Actors Guild, whose contract expires June 30, will be reached without another strike.[20] Audiences at CBS, the first network to air new episodes after the walkout ended, fell 19 percent, the most of any broadcast company, during the work stoppage. A year earlier, CBS broadcast the National Football League's Super Bowl championship, the most-watched event televised in the U.S. Fox carried the Super Bowl this year.[12]
CBS rose 66 cents, or 2.9 percent, to $23.20 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has dropped 15 percent this year.[20]
Net income increased to $244.3 million, or 36 cents a share, New York-based CBS said today in a statement.[20] The broadcasting company's profit increased to $244.3 million, or 36 cents a share.[6]
The company posted net earnings of $244.3 million (36 cents) per diluted share as compared to $213.5 million (28 cents) in the year-ago period.[21] Last year, the company recorded adjusted earnings of $266.3 million, or $0.35 per share.[13] Excluding stock-based compensation and restructuring charges, earnings from continuing operations came in at $291.4 million, or 43 cents per share.[15] Analysts called for earnings of 33 cents per share on revenue of $3.56 billion.[15] On average, 21 analysts polled by First Call/Thomson Financial expected earnings of $0.33 per share for the first quarter.[13]
Overall, CBS results came in well ahead of forecasts. Reuters Estimates calculated its adjusted earnings per share at 40 cents, which it said was ahead of analysts' forecast of 34 cents a share on the same basis.[1] With the earnings rise, CBS's board of directors has boosted the company's quarterly dividend by 8% from 25 to 27 cents per share.[21] Indicating confidence in the future, the company's board increased the quarterly dividend by 8.0% to 27 cents from 25 cents a share.[18]
The quarterly dividend increased to 27 cents from 25 cents previously. The company reiterated a forecast for 3 percent to 5 percent growth in operating income this year.[20]
Executives stressed that CBS continues to perform well and the company continues to expect growth. Advertising related to political elections also should help results this year. Amid the weaker business conditions, CBS cut staff at its local television business and its radio division during the quarter.[22] Local television was "not as strong as we would have hoped," Chief Financial Officer Fred Reynolds told investors during a conference call Tuesday. CBS could be hurt more than its peers from a slowdown, as it relies on economically sensitive advertising for roughly two-thirds of its revenue. CBS executives stressed they expect the company to grow despite soft local-TV results. Local-ad spending this year will be lifted by advertising related to political elections.[17]
CBS is more exposed to an industry-wide advertising slowdown, with about two third of its revenue coming from advertising. It's also more exposed to the impact of the writers' strike than any of its competitors, with its signature network comprising a big chunk of the company.[4] The company also benefitted from lower costs stemming from the writers' strike, which ended in February. Investors have worried about the prospects of CBS traditional media business as consumers and advertisers pull back on their spending. Until recently, CBS and other media conglomerates had largely signaled they were unaffected by broader economic slowdown, but CBS acknowledged Tuesday the slowdown was hurting its local television business.[17]
CBS also cut local-television staff and took other steps to mitigate the weaker economic conditions. More savings are expected from changes in its TV business stemming from the writers' strike.[17] Ratings for CBS hits "Two and a Half Men,'' "CSI: Miami'' and others have rebounded since TV writers returned to work in February after a more than three-month strike shut down production.[12]
An important factor in the quarterly results was CBS' 85% increase in TV license fees, largely from the syndication sales of "Raymond" and "CSI." "This was an unusual quarter," said Michael Nathanson, media analyst with Bernstein Research.[6] Revenue from "CSI,'' as well as syndication fees for the show "Everybody Loves Raymond,'' helped CBS post an unexpected increase in sales at the television unit and made up for a 15 percent drop in advertising.[20] The quarter's weak line-up and the writers' strike caused a 15.0% drop in advertising sales, which could have been worse if not cushioned by increased political advertising. Weakness within the television segment overshadowed several strengths, including an international distribution deal for its grisly crime investigation series, "CSI," and second-cycle syndication for the sitcom "Everybody Loves Raymond."[18]
A boost in syndication revenue, largely via new global distribution deals for "CSI," pushed profits to $244.3 million in the period ended March 31, up from $213.5 million in the year-earlier frame. [23] The company, which also owns the Showtime cable channel, Simon & Schuster and a major radio business, earned $244.3 million in the first three months of the year, up from $213.5 million a year ago.[9]
CBS Radio, however, saw revenues fall by 9 percent, to $363.6 million from $397.5 million in the same period a year before.[14] CBS Radio revenues fell 9.0% to $363.5 million because of weak ad sales and divested stations.[18] The radio division's operating profit fell 27 percent to $115 million on declining revenue.[20] The outdoor unit posted a 7 percent rise in revenue in the quarter to $496.9 million, while operating profit fell 6.2 percent to $44.1 million on higher billboard lease and transit costs and depreciation expense due to capital expenditures.[20]
TV revenues, meanwhile, were up 1 percent in the quarter, at $2.6 billion, while outdoor rose 7 percent, to $469.9 million from $462.3 million.[14]
If there was a blemish in the quarterly results, it was radio, whose revenues slipped 9% in the quarter, with operating net falling 27% to $115 million. Execs asserted their confidence in the unit Tuesday.[23] CBS Radio said the decline reflected "weakness in the radio advertising market and the impact of radio station divestitures." The dip was partly offset by $10.4 million in revenue associated with its former agreements with Westwood One that were concluded during Q1 2008.[14] The company's radio unit saw a 9% decline in revenue from $397.5 million to $363.5 million.[21]
CBS has the resources to easily finance a $5 billion acquisition, Blackledge said. Moonves, 58, said the company is seeking to buy businesses that are growing faster than its TV network and radio stations. That includes interest in Landmark Communication Inc.' s Weather Channel and Internet companies, Moonves said at an investors conference last month.[12] "A lot of people have failed to see that." He said each of the pay-TV channels can succeed. CBS also outlined its plans for the coming "up-front" season, when television networks announce new series for the fall and presell much of the advertising for the new TV season. CBS Chief Executive Les Moonves said his network is better-positioned than most for the up-front, which he said he expects to be "very healthy."[22] Moonves said CBS has new shows to present to advertisers during next month's up-front, but not full episodes of TV pilots as in past years.[22]
Showtime, which added 1.3 million subscribers in the quarter, will save $300 million a year by ending contracts to air films from Viacom Inc.' s Paramount Pictures, Metro-Goldwyn- Mayer Inc. and Lions Gate Entertainment Corp., Moonves said. The savings will be used to create new original programs, which have been the source of new subscribers, he said. Led by Paramount, the studios announced plans this month to create a pay channel to compete with Showtime.[20] CBS chief Leslie Moonves offered a reminder of the tough comparisons in the quarter given that the Super Bowl and the first part of college basketball's Final Four aired on CBS in the first quarter of 2007. He also struck an upbeat note about SAG talks and Showtime's fortunes in the wake of Viacom's joint-venture pay TV announcement.[23] Moonves would say only that CBS execs "look at everything." The quarterly results were a nice change of pace for Moonves, who has been contending with grim headlines about Katie Couric, his own pay package and a Viacom pay TV venture that could have long-term implications for CBS' feevee outlet Showtime. The actual impact of those items on the company's financials is arguably minimal, but it hasn't been an easy time from a PR standpoint.[23]
CBS shares rose 3.8%, roused by the TV results and the sixth dividend increase since CBS became a public company.[17] CBS prefers returning cash to shareholders through dividends, Chief Financial Officer Fred Reynolds said. Last year the company bought back shares with proceeds from the sale of its theme-park business and other assets, he said.[20]
Already the largest owner of billboards in North America, CBS added 17,000 locations in Argentina, Brazil, Uruguay and Chile. Earnings at CBS's publishing division, which includes Simon & Schuster, fell 32 percent after record sales a year earlier on best-selling titles such as "The Secret'' by Rhonda Byrne.[20] Already the largest owner of billboards in North America, CBS added 17,000 locations in Argentina, Brazil, Uruguay and Chile with the purchase. Outdoor first-quarter earnings before interest, taxes, depreciation and amortization gained 12 percent to $112 million, Blackledge estimated in his report. Sales rose 6.8 percent to $493.6 million, he wrote.[12] Per-share earnings rose to 36 cents from 28 cents while free cash flow was up 25 percent to $938 million from $752.9 million for the same prior-year period.[3] Per-share earnings rose to 36 cents from 28 cents, ahead of analysts estimates of 33 cents, as compiled by Thomson Financial.[19]
Profits per share rose to 36 cents, beating the 33 cents predicted by analyts polled by Thomson Financial, and also above the 28 cents a year ago.[9]
"As a result of our continued confidence in our businesses, we are increasing our quarterly dividend by 8% to $.27 per share, paying among the highest dividends in the industry." Copyright 1989-2008 RADIO ONLINE ® The publisher makes no claims concerning the validity of the information posted on RADIO ONLINE and will not be held liable for its use. No part of this material may be reproduced in any form, incorporated in any information retrieval system or otherwise redistributed without the prior written permission of the publisher.[21] On an adjusted basis, net earnings would have been $291.4 million or $0.43 per share.[13] CBS stock, which had closed Monday at $22.54, was at $23.40 per share in late morning Tuesday.[5] STOCK PERFORMANCE: CBS shares fell 19 percent in the quarter to finish March at $22.08.[10]
CBS's shares rose 66 cents, or 2.9 percent, to close at $23.20 Tuesday. They have traded in a 52-week range of $20.68 to $35.75.[9] Shares recently changed hands at $23.39, up 85 cents. It may be difficult to draw long-term conclusions from the first-quarter TV results, however.[17]
The results beat Wall Street estimates of profit of 33 cents on sales of $3.55 billion.[2] The quarter's results include $43.5 million of income tax expense and sales were flat at $3.7 billion.[18] Lower TV production costs and sale of reruns help buoy results. Led by stronger-than-expected results in its TV division, CBS Corp. on Tuesday beat Wall Street expectations and posted a 14% jump in net income for the quarter ended March 31.[6] The question really is about sustainability. It's unclear to us whether these results can be sustained, particularly given the large number of one-time results during this quarter," such as the syndication sales. Its premium pay cable TV channel, Showtime, also made gains.[6] CBS's quarterly gain, which was higher than forecasts, was the result of higher syndication sales from the CSI franchise in overseas markets.[24] The results were bolstered by an 85% gain in television licensing fees which were helped by higher domestic and international syndication sales.[2]
An 85.0% increase in license fees also helped television sales grow 1.0% to $2.6 billion despite the quarter's comparatively light sporting event coverage.[18] Television revenue reportedly inched 1% higher to $2.6 billion in the first quarter, though advertising revenue declined by 15%, largely due to the NCAA Men's Basketball Tournament (a.k.a. March Madness) airing in the second quarter instead of the first quarter (like in 2007).[15] The profit jump was paced by television, the company's largest division, where revenue rose 1% to $2.6 billion.[17] The company's radio business continued to struggle, with reported revenues falling 9 percent and profits falling 26 percent.[9]
A reduction in production expenses during the 100-day writers strike contributed to the performance, which beat numerous analysts''' expectations, by raising profits for the television division, in spite of a 15% decline in ad revenues as a result of the strike.[5] The television division, the company's largest, boosted results with an unexpected increase in revenue and a 15% jump in operating income.[25] The radio division's first-quarter revenue fell 9% as operating income slumped 27%.[17] Radio operating income (OI) fell 27% to $115 million from $156.8 million.[21] Free cash flow, meanwhile, was up 25 percent, to $938 million from $752.9 million, while OIBDA rose 10 percent, to $720 million, and operating income was up 11 percent, to $602.2 million.[14]
The company may say net income jumped 34 percent to $271.9 million, the average of 10 analysts' estimates.[12]
"I'm very pleased with the operating performance of the company, which produced terrific first quarter free cash flow of $938 million and diluted EPS of $.36," added President/CEO Leslie Moonves.[21] Mr. Moonves said, with free cash flow up about 25% year-to-year to $938 million, the strongest level since the separation, the company is equipped to look for opportunities to acquire assets in three key areas: content ('''the core of what we do'''), interactive and outdoor advertising. '''We clearly have the cash to make the right moves as they come along,''' Mr. Moonves said.[11] The new channel "will make available to us $300 million to invest in programming going forward," Moonves said.[23]
"There was some softness in the market other than political, which obviously covered a lot of the sins," Moonves said. Analysts were curious about how CBS plans to spend its $2.3 billion in cash in light of reports that it is expected to join the bidding for the Weather Channel, owned by Virginia-based Landmark Communications Inc.[6] Now back at pre-strike levels of original programming in prime time, CBS is in a '''dead heat''' with Fox for total viewers and running second among viewers 18 to 49 years old, CBS Corp. President-CEO Leslie Moonves said Tuesday. He was speaking to financial analysts after CBS released its first-quarter earnings report. Looking ahead, Mr. Moonves said he expects a '''very healthy upfront season.''' CBS presents its lineup for 2008-09 at Carnegie Hall in two weeks.[11]
Sumner Redstone, executive chairman of CBS Corp. and chairman of Viacom, opened the earnings call with praise for '''my friend Leslie,''' whose performance and job security have been the subject of recent rumors.[11] With CBS producing feature films and Viacom building a premium channel, the two companies that share Sumner Redstone as chairman and largest shareholder are becoming more competitive. Redstone said on the conference call that he believes the competition is good and that he supports Moonves and Viacom CEO Philippe Dauman.[20] CBS, like other mainstream media companies, is still reeling from the sea change caused by the Internet. Odds are good that it will merge its floundering news division with CNN. Couric's time as CBS Evening News anchor is coming to an end sooner rather than later despite protestations from CEO Les Moonves to the contrary. Investors should avoid this company as long as it's under the control of the mercurial billionaire Sumner Redsone. He cares most about Sumner Redstone.[2] On the conference call, Sumner Redstone, the controlling shareholder of CBS and Viacom Inc. (VIA, VIAB), responded to concerns about plans for a new pay-TV channel from Viacom and two other movie studios.[22] Analysts have pointed out that the plans pulled Viacom into competition with CBS' Showtime network, and reports have surfaced of conflicts between CBS and Viacom management over the new pay-TV network. Redstone said he supported both companies' pay-TV projects. "It is not true that success between each of these (companies) is mutually exclusive," Redstone said on the call.[22] There is a large amount of product that is out there, top-quality product. We are confident that we can make these deals and that Showtime won't miss a beat." Sumner Redstone, chairman of both CBS and Viacom, addressed a question from Merrill Lynch media analyst Jessica Reif Cohen about the decision to launch the channel.[23]
The strong showing by the television business of CBS, formed by the split of , makes amends for the uncertainty over the high-profile news division. "It shows CBS is holding its own despite the recessionary advertising environment in the U.S.,'' Fred Moran, an analyst with the Stanford Group in Boca Raton, Florida, told Bloomberg News.[24] OVERVIEW: CBS (nyse: CBS - news - people ) operates television and radio stations, and sells advertising space on outdoor billboards.[10]
The broadcaster posted a 14.4% rise in earnings thanks to rising license fees and syndication deals. In the first three months of 2007, CBS (nyse: CBS - news - people ) had both college basketball semifinals and Super Bowl broadcasts to lure advertisers.[18] Today's news has rallied the security 3.75% higher, and the shares of CBS are now poised to close atop that trendline for the first time since September 2007.[15]
CBS halted a string of downbeat headlines Tuesday, posting a 14% increase in profits for the first quarter.[23] CBS owns Simon and Schuster, which last year benefited from publishing hit inspirational book "The Secret," in last year's first quarter.[4]
Last month, Fox passed CBS in total viewers for the season by luring audiences with football and its "American Idol'' singing competition. Last year, CBS broadcast the National Football League's Super Bowl championship, the most-watched event televised in the U.S. Fox carried the game this year.[20]
During the last year, Showtime has added 1.3 million subscribers, Moonves said, for a total of 15.5 million homes. Other divisions did not fare as well.[6] The broadcast network will be the '''centerpiece''' of an upfront presentation that will offer a '''highly appealing array''' of other advertising opportunities '''to match the needs of today'''s market,''' Mr. Moonves said. The CBS chief said he is optimistic that negotiations will prevent an actors strike this summer. The talks with the Screen Actors Guild, which were scheduled to resume this morning, are '''much more cordial''' than those with the WGA were, he said.[11] Moonves noted that "tens of millions" in expenses have been trimmed in terms of pilot production -- a move hastened by the 100-day writers strike. Moonves said his history as a network exec helps him grasp, even from a few scenes, the potential of a new show.[23]
Even without the Super bowl or March Madness, TV revenue increased one percent. That doesn't sound like much, but considering that this quarter was the one in which the impact of the strike was truly felt, one percent is a huge relief. [4] TV revenue advanced 1 percent, beating an estimate for a 4.5 percent drop by JPMorgan Chase & Co. analyst John Blackledge.[20]
Syndication revenue climbed 85%, helped by a one-time payment from a new international syndication agreement for the "CSI" TV series.[17] The 85 percent jump in TV license fees fueled the increase, including a new international distribution arrangement for the "CSI'' franchise.[20]
Sales probably fell 3.3 percent to $3.54 billion, the average of 11 analysts' estimates compiled by Bloomberg. [12] Sales were little changed at $3.65 billion, beating the $3.52 billion average of 11 analysts' estimates compiled by Bloomberg.[20]
CBS guided for operating income before depreciation and amortization and operating income growth to be in the range of 3.0% to 5.0% based on 2007's OIBDA of $3.2 billion and operating income of $2.7 billion, excluding compensation expense. [18] CBS said it expects to see growth in operating income before depreciation and amortization in the range of 3 percent to 5 percent in 2008. That figure also excludes stock-based compensation expense and restructuring charges.[16]
"There is no one, no one, that I would rather have at the helm of than Les Moonves," Redstone said in a conference call, after CBS reported a 14 percent rise in quarterly earnings. That is extraordinary attention from Redstone, who in the past has seemed to resent the limelight that executives like Mel Karmazin basked in while serving under him. He has been impatient with executives. He abruptly replaced Tom Freston and Frank Biondi and ultimately forced out Karmazin. [24] CBS also reported a 6.0% increase in affiliate sales driven by rate increases and subscriber growth at Showtime and CBS College Sports Network.[18] '''More than 50% of the pilots we did cost 50% of what a normal pilot would cost,''' said Mr. Moonves, who estimated the resulting savings at tens of millions of dollars. He gave no hints about the development except to say he thinks CBS will have more original product finished before the presentation than other networks. He said he had only seen two pilots, '''one of which I absolutely adore.'''[11] Last week, CBS paid $110 million for Montevideo, Uruguay- based International Outdoor Advertising.[12] The surprise was thanks largely to the syndication of successful CBS shows, which added about 280 million of incremental license fees. For instance, CBS struck an international deal to distribute its CSI series.[4] Ratings for the CBS shows "Two and a Half Men,'' "CSI: Miami'' and others have rebounded since TV writers returned to work in February.[20]
CBS Corp. posted a 14% jump in first-quarter net income and increased its dividend, but the company acknowledged some pains from the slowing economy.[25] Outdoor has carried the company in recent periods, as CBS switches to digital billboards in many locations, boosting revenue sharply.[10] CBS, which owns the publishing company Simon & Schuster, said the quarter's best-sellers failed to match 2007's big first-quarter page-turner: Rhonda Byrne's The Secret.[18] In 2008, however, Fox tackled Super Bowl coverage and the NCAA Men's Basketball Tournament Semifinals aired in CBS's second quarter, hurting first-quarter television sales comparisons by 10.0%, the company said.[18]
CBS declined to address reports Tuesday that the company was in final bidding for the Weather Channel, or earlier speculation that it may be in the running for Rainbow Media or Scripps Networks.[23] CBS is a slow growth company that will ebb and flow with advertising trends. It has a strong enough balance sheet that it could try to make an acquisition like the Weather Channel.[4]
Radio, though, will continue to suck wind as will Publishing. The shares would rise further if CBS disposed of one or both of those units. [2] Given ratings trends and Internet capabilities, CBS says, radio is an efficient ad vehicle, especially in recessionary times. CBS will hold its network upfront May 14 at Carnegie Hall.[23]
By the end of the year, Blackledge predicts the billboard business will surpass the radio unit as the second-biggest contributor to CBS's operating profit after TV.[12] Revenues were essentially flat at $3.65 billion versus $3.66 billion a year ago.[19] Some new titles will come from the soon-to-launch CBS Films, which aims to start releasing four to six pics a year.[23] The 27-cent dividend declared Tuesday was the sixth in the 2'' years since Viacom and CBS were split.[11]
Speculation about Moonves has been growing as questions mount about the fate of Katie Couric, the CBS Evening News anchor. Two weeks ago, the news program had its worst five days of ratings in its history.[24]
Excluding stock-based compensation and restructuring impacts, earnings rose to 43 cents a share from 35 cents a share. [17] Ahead of the earnings report, near-term options players have remained relatively skeptical of CBS. The stock's Schaeffer's put/call open interest ratio of 0.78 has been more bearishly aligned only 21% of the time during the past 52 weeks. Since hitting an annual high of $35.75 in July 2007, the stock has lost roughly 40%, led lower by resistance from its 80-day moving average.[15]
Those companies -- which include LG Electronics http://www.broadcastingcable.com/article/CA6550441.html, Philips Consumer Electronics http://www.broadcastingcable.com/article/CA6523687.html and Sanyo http://www.broadcastingcable.com/article/CA6295762.html -- agreed to pony up a total of $3.4 million and to: train employees; fix noncompliant TVs on the market; review and test their equipment; and report periodically to the FCC. That came on the heels of $6 million in proposed fines against retailers http://www.broadcastingcable.com/article/CA6550309.html for various rule violations.[26]
SOURCES
1. CBS earnings beat forecasts | Reuters
2. Should investors tune into CBS? - BloggingStocks
3. CSI Syndication Boosts CBS Profits | April 30, 2008 | AHN
4. CBS Earnings: Why They Came Out As Well As They Did - Media Money with Julia Boorstin - MSNBC.com
5. CBS Earnings Beat Forecasts - TVWeek - News
6. CBS profit jumps 14% - Los Angeles Times
7. Radio Ink - The Voice of Radio Revolution
8. UPDATE 2-CBS earnings beat forecasts, raises dividend 8 pct | Markets | Markets News | Reuters
9. The Associated Press: CBS profits rise 14 percent on boost from syndication
10. Earnings preview: CBS outdoor unit expected to carry 1Q - Forbes.com
11. Moonves Touts CBS' Strengths to Analysts - TVWeek - News
12. Bloomberg.com: U.S.
13. CBS Q1 Profit Rises [CBS] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
14. Radio Ink - The Voice of Radio Revolution
15. Schaeffer's Investment Research - Schaeffer's Daily Market Blog: Breaking Option News, Commentary, & In-depth Analysis
16. CBS Reports Higher Profits on 'CSI' Syndication Sales
17. 3rd UPDATE: CBS 1Q Net Up 14% On TV Strength; Dividend Raised
18. CBS Proves Life Exists Outside Of Sports - Forbes.com
19. The Associated Press: CBS profits rise 14 percent on boost from syndication
20. Bloomberg.com: U.S.
21. RADIO ONLINE ®
22. CBS Financial Chief: Local TV Market Weaker Than Expected
23. CBS posts increase in profits - Entertainment News, Business News, Media - Variety
24. Moonves Wins Reprieve on CBS Profit - Portfolio.com
25. Free Preview - WSJ.com
26. FCC Reaches Consent Decrees with DTV Manufacturers
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