The economy continues to take its toll on the ad-driven media, as evidenced by CBS’ 6 percent drop in fourth-quarter revenue to $3.52 billion and 46 percent dip in operating income before depreciation and amortization (OIBDA) to $448.9 million.
For the full year, revenue fell 1 percent to $13.95 billion, with a 17 percent slide in OIBDA to $3.07 billion. Those figures do not include the $14 billion write down (or “impairment charge,” as the company calls it) CBS took in the third quarter.
Net earnings for Q4 slipped 50 percent to $136 million. For the year, including the impairment charges, the company suffered an $11.7 billion loss.
CBS said about half of the Q4 decline was attributable to weaknesses at the network and the other half stemmed from shortfalls at the company’s owned TV stations. (Click here for complete CBS earnings information.)
During a conference call with financial analysts, CBS CEO Leslie Moonves said the company was managing costs closely so it could “capitalize on the upturn when it occurs.” He said the network TV and interactive units were fairing somewhat better than local TV, radio and outdoor.
Guidance for 2009 was vague, but Moonves did say the second half of the year would improve because of cost cutting that would take effect. About $220 million in cuts for the year are planned. In addition, new cable-network syndication deals for five new programs will kick in.
Moonves also indicated that currently one-third of the company’s revenue is now derived from non-advertising sources, providing a “buffer” in the recession.
He noted that CBS just completed its third major retransmission deal, with EchoStar’s Dish Network, following earlier agreements with Time Warner Cable and Verizon. “We said we would get paid for our content [from cable, telco and satellite operators] and we are,” Moonves said.
As for the current scatter market, CFO Fred Reynolds said pricing is up compared to the 2008 upfront — but he declined to give specifics. Volume, perhaps not surprisingly, is tepid. “It’s clearly a buyer’s market,” he said.
As to the upcoming upfront market, Moonves said: “We are looking forward to it because we have a good story to tell.” He said the network was leading in total viewers by roughly 3 million per night and was up in all of key demographic measurements.
The company generated $1.7 billion in free cash flow in 2008 and, effective this April, will trim its dividend payment to 5 cents a share in order to gain greater financial flexibility as it navigates through the choppy recessionary currents.