CBS Local Business Hit Hard

What can you say about local advertising in this economy? CBS executives kept their remarks short and sweet Wednesday (Feb. 18) during the company’s fourth quarter and full year 2008 conference call. Preferring to gloss over plunging revenues in its local radio, TV and outdoor businesses, Les Moonves, president and CEO for CBS instead talked up the one-third of CBS’ businesses that are non-advertising supported, including unspecified fees from retransmission consent.

The biggest hit to CBS’ local businesses was in fourth quarter when the bottom fell out of the ad market. To offset an anemic economy, CBS has been aggressively cutting costs and staff across all three local segments in radio, TV, and outdoor. Both radio and outdoor accounted for 73 percent of the company’s restructuring charges.

The one positive: “We believe most of what we’re feeling is cyclical, not secular issues that will improve when the economy turns around,” Moonves said.

Due to weak ad sales and a handful of radio station divestitures, radio declined 18 percent to $366.7 million, adding up to a 12 percent drop to $1.5 billion for the year. While trying to divest 50 of its smaller market stations, the company said it remained committed to its strategy of focusing on large market radio “as a key part of our portfolio,” Moonves said.

Outdoor, including domestic and international, dropped 15 percent to $526.4 million. But because outdoor had strong gains in the first half of the year, the segment was down only 1 percent in 2008 to $2.17 billion. On the whole, outdoor is faring better than TV and radio.

“Outdoor isn’t down nearly to the extent of radio and TV,” said Fred Reynolds, chief financial officer for CBS. “Occupancy is about the same, but pricing is down. Pricing power went to the buyer,” Reynolds added.

CBS does not break out TV stations from its network business, but blamed half of the 8 percent revenue decline on TV stations. “Strong political of $60 million could not offset rapid decline in auto and retail,” Reynolds said.