CBS Q3 results exceed estimates

Executives bullish on continuing ad improvement

NEW YORK -- CBS Corp. on Thursday again cited improving advertising momentum as it reported mixed, but better-than-expected third-quarter results after the market close.

"The operating environment for our businesses continues to improve, and we are finishing the year with strong momentum," said CBS Corp. president and CEO Leslie Moonves. "So far this year, each quarter has been better than the one before, with the third quarter showing significant improvement over the second, just as we expected."

On a conference call, he predicted ad momentum will further improve into 2010, while cautioning that the economy remains vulnerable. "We expect stronger underlying growth trends for ad markets into next year," he said. Plus, retransmission fee revenue will double next year based on contracts already signed, Moonves added.

Local ad trends, which have been most hurt by the recession, are improving every week, according to the CEO. Excluding political ads, local TV station ad revenue was even up year-over-year in October, and those trends continue in November, he said.

The CBS network has seen such high ad demand that the ad sales team has asked to make space for more ad units by cutting out some promo spots, Moonves said.
And scatter market ad prices are up nearly 25% over upfront levels in the current fourth quarter, with overall scatter dollars are up more than 100% over last year when networks held back less ad inventory for scatter, management said.

Executive chairman Sumner Redstone on the call also talked up the improving ad trends at CBS. "The light at the end of the tunnel continues to get brighter," he said.

CBS posted a quarterly profit of $207.6 million including one-time charges and benefits that boosted the bottom line by $38.1 million. In the year-ago period, CBS had posted a loss of $12.46 billion due to impairment charges, or a profit of $265.9 million when excluding them.

Quarterly revenue declined only minimally from $3.38 billion to $3.35 billion. TV unit revenue rose 9%, but TV ad revenue fell 5% amid continued weakness in the local ad market and weaker political ad sales.

Radio and interactive results were weaker, leaving the earnings report a bit of a mixed bag.

Moonves Thursday also touted the late-night ratings successes of David Letterman and Craig Ferguson on CBS and the network's overall performance, highlighting that it was ahead of Fox until "those testy Yankees" and the World Series drew so much attention.

He also said CBS is talking to media measurement firm Nielsen, the parent of The Hollywood Reporter, about including online viewership in its live-plus-7 data to fully account for all people watching a TV show. Moonves said CBS isn't getting paid for all viewers yet.