CBS selling radio stations as shares lag
EmptyShares of CBS Corp. shares hit a 52-week low Thursday after the company posted 1% increases in second-quarter profit and revenue but lowered its full-year outlook amid a sluggish U.S. economy that has started to impact the media sector.
TV advertising revenue for the period fell 6%, worse than what Wall Street expected, because of weakened local station ad trends and lower primetime ratings. Radio revenue slumped 10%.
To boost its financial growth, CBS Corp. said it will sell 50 of its radio stations in midsize markets to focus on big markets that have performed better and use the proceeds for stock buybacks. CBS operates 140 stations in the U.S.
Management said it also will continue to look for cost-cutting opportunities across the board.
"Yes, the economy is tough right now," president and CEO Leslie Moonves said. "But we're managing our businesses effectively."
Still, CBS Corp. reduced its 2008 estimates to unchanged operating income and a low-single-digit percentage gain in operating income before depreciation and amortization. It had projected 3%-5% growth for both metrics.
In another move to boost growth rates, CBS recently acquired CNet to become a top 10 online player in the U.S. and expand in the fast-growing digital space. Moonves touted the deal as taking the new CBS Interactive to a new level and said the integration has worked "extremely well" in the early going. "We like the upside of the new CBS Interactive," he said.
CBS posted a second-quarter profit of $408.4 million.
CBS Class B shares closed at $16.36 after setting a new 52-week low of $16.14 earlier in the day. CBS stock appears to be a very attractive "buy" at these levels, but only for long-term holders who don't mind waiting out the recession, Miller Tabak analyst David Joyce said.
CBS chairman and controlling shareholder Sumner Redstone said he's ready to wait. "The economy is in the midst of a slowdown," he said, but CBS is "very well positioned" over the long term. (partialdiff)