CBS' Q2 Gain Buoyed by Local Recovery

What dragged CBS down last year is propelling CBS forward this one. The advertising recovery at CBS' local radio and TV stations led the growth at the media giant, which reported second quarter revenues of $3.33 billion, a gain of 11 percent compared to a year ago. Local broadcasting was up 17 percent to $678.2 million, with TV stations up a whopping 31 percent to $337.9 million driven by categories such as auto, telecom, retail and entertainment. Radio revenue increased 6 percent to $322 million, with stations in the top 10 markets up 10 percent.What's more, there doesn't seem to be any slow down for the rest of the year with advertisers booking dollars further in advance of campaign airdates. CBS expects political to approach $200 million for the year. "Third quarter pacing is as good as second quarter, if not better," said Les Moonves, president and CEO of CBS. The media company enjoyed increases across all its segments with entertainment up 10 percent to $1.67 billion, cable networks up 12 percent to $368.8 million, and publishing (Simon & Schuster) up 5 percent to $189.7 million. CBS Outdoor revenues grew 5 percent to $456.3 million, led by a 9 percent increase in the U.S. and a 14 percent gain in the United Kingdom.During a conference call with investors Tuesday (Aug. 3), Moonves touted two recent deals that will shape the media company's fortunes: CBS' retransmission deal with Comcast; and the company's long-term agreement to carry the NCAA. Calling the deal with Comcast "the most significant deal on record" and "a win for both companies," Moonves provided some more details about the agreement and the dual revenue stream it brings the company for the next 10 years. The deal includes built-in escalators that will ensure growth over the term of the contract. In addition, the Comcast retransmission pact includes flexibility for the development of new media distribution in video on demand and online, but doesn't limit CBS from doing deals with other distributors outside of Comcast."We'll be trying lots of things with Comcast to put our media online," Moonves said.With the Comcast agreement signed and sealed, Moonves reiterated the company's progress towards delivering north of $250 million in retransmission revenue by 2012.In fact, Moonves was bullish about getting paid for the company's content not just from cable, but also from the company's affiliates. "We're spending a lot of money on our content and we feel it is appropriate, as affiliate contracts come up, that we get paid," he said. "We've successfully negotiated with all of them as contracts come up, without any threats of pulling the plug [on any content]."Though CBS will still entertain deals to sell some of its TV and radio stations in smaller markets, it's also working to leverage its local assets in new ways. The company is combining the resources of its local broadcast outlets in New York, WCBS-TV and the three News and Sports stations (WCBS-AM, WINS-AM and WFAN-AM) in a new Web site: cbsnewyork.com. The site, in beta now, will serve as the model for future sites in other cities where CBS has both radio and TV stations with Los Angeles next on the list.

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CBS' Q2 Gain Buoyed by Local Recovery

Katy Bachman

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