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CBS Rev. Down; Network TV Ads See Improvement in Q3

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CBS Corp. revenue was down, but profits rose for both the third quarter and the first nine months of the year, the company reported Thursday after the markets closed. Network TV advertising improved in Q3, and Q4 scatter pricing and demand are both exceptionally strong, CBS executives said.

Company CEO Leslie Moonves said the "operating environment continues to improve." He said the CBS TV network was commanding Q4 scatter pricing 25 percent ahead of upfront rates, and that the network is on pace to rake in twice the scatter revenue it realized in Q4 2008.

"I've had some agencies tell me that they were sorry their clients hadn't bought more" time in the upfront market, Moonves told analysts on a conference call to discuss the results. He declared that the networks strategy of holding back inventory in face of price rollbacks during the upfront was the right move. He said the network is cutting back on promos to accommodate the demand for scatter time.

Asked about a report that Oprah Winfrey could move her talk show to OWN cable after her current deal expires in 2011, Moonves said CBS is still in renewal talks with Winfrey, and  it would likely be a few months before the outcome is clear.

For the first time this year, network revenue was up, albeit "slightly," said CBS CFO Joseph Ianniello, who noted as a good sign the "sequential improvement" at the network from Q2 (when revenue dipped 6 percent) and Q1 (- 9 percent). The pharmaceutical and auto categories showed notable improvement, he said.

All told, the company reported a less-than-1 percent drop in revenue for the third quarter to $3.35 billion, but posted a profit of $207.6 million, compared to a loss of $12.5 million for the same period a year ago. Cost cutting contributed to the improvement.

Revenue dropped 9 percent for the first nine months to $9.5 billion, while net earnings totaled $168 million, compared to a loss of almost $12 billion for the same period in 2008, due largely to write-downs and impairment charges.

Three of the company's five divisions posted revenue declines during the quarter, including radio (-19 percent), outdoor (-23 percent) and interactive (-15 percent).

But revenue at the television division, including the CBS network, Showtime, program production and owned TV stations, rose 7 percent to almost $2.3 billion. For the first nine months, revenue from the division is down 5 percent to just over $6.4 billion.

TV station revenue slid 13.6 percent for the quarter, in part due to the lack of political spending that swelled the coffers a year ago.

In the radio division, the top 10 markets were up slightly in revenue vs. Q2, an indication, said Ianniello, of a recovery in that sector.

Separately, the company said that beginning in Q4, it would break out its financials differently. Instead of the current TV, radio, outdoor, interactive and publishing units, it will issue results for entertainment (TV network, production, distribution and films and interactive); cable; publishing; local broadcast; and outdoor.