CBS Corp. posts loss, sees positive signs

Moonves cites early indications of improving ad market

NEW YORK -- CBS Corp. swung to a first-quarter loss as the recession continued to drag down various advertising businesses. But management echoed other industry biggies after the market close Thursday in saying it is seeing signs of stabilizing advertising trends.

The media giant recorded a quarterly loss of $55.3 million, compared with a profit of $244.3 million in the year-ago period. Revenue declined 13% to $3.16 billion. TV ad sales fell 15% on the ad softness and significantly lower political ad revenue.

"Like other companies, our results were affected by the economic downturn that continued during the first quarter," said CBS Corp. president and CEO Leslie Moonves. "We are confident that the second half of the year will bring improved results due to a strong slate of syndication releases, the effect of cost reductions that were made last year and early signs of an improving local advertising marketplace."

Said executive chairman Sumner Redstone: "During a tremendously challenging period, Leslie and his team continue to manage CBS with distinction. I have no doubt that the actions we are taking today, together with the strength of our industry-leading content, will translate to significantly better results once the economy improves."

Television revenue decreased 12% to $2.23 billion as ad revenue fell, affiliate revenue rose 9% and home entertainment revenue increased 69%. TV operating income before depreciation and amortization fell 49% to $228.7 million.

Radio revenue dropped 29% to $259.7 million as OIBDA fell 57% to $52.2 million.

Interactive revenue of $133.6 million fell 5% on a comparable basis.

On the CBS earnings call, management further discussed the state of the ad market. "I have no doubt that a recovery is coming in the not too distant future," said Redstone.

"We feel it is starting to turn," in both local and national advertising, said Moonves, adding that pacings have improved in each of the past few weeks.

Discussing the upcoming upfront ad market, he said he is "confident that we'll take share," citing NBC's decision to put Jay Leno into the 10 p.m. weekday time slot as one factor that CBS hopes to benefit from with its nightly changing shows.

Overall, CBS now expects full-year 2009 OIBDA of $1.725 billion to $1.925 billion.

Moonves predicted a better second half thanks to new TV shows entering syndication and likely ad market improvements.

Asked for more detail on how much ad money could be up for grabs with the launch of the new Leno show, Moonves said CBS is the top network in the 10 p.m. time slot four out of five nights and suggested in a ballpark estimate that up 6 to 10 percentage points of additional market share could be gained in the 10pm slot. In a market worth hundreds of millions of dollars, even a small gain would be a boon, he said.

The scatter market has seen ad sales volume increase in recent weeks with prices coming in slightly above upfront levels, said Moonves, who also reiterated his firm's reasons for not striking a distribution deal with online video firm Hulu.

"TV.com is doing extremely well," he said, adding he wants to stay away from the Hulu-type exclusive distribution deals in the digital world. "We will be in control of our own destiny." But Moonves left open the possibility that CBS content could end up on Hulu or Hulu content on TV.com over time.

Before the earnings report, CBS Class B shares closed up 1% at $8.06.
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