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Weak Radio Holds Back CBS Results in 1Q

Updated:
NEW YORK (AP) _ CBS Corp. reported lower first-quarter profits Wednesday compared with a year ago, before it had split up with Viacom Inc. On a comparable basis, earnings were flat as better results from outdoor advertising and TV were offset by continued weakness in radio.

CBS reported net income of $226.9 million for the first three months of the year, compared with $585 million reported by the former Viacom company, which split into CBS and ``new'' Viacom at the beginning of the year. On a comparable basis, CBS's year-ago earnings were $225 million.

Earnings per share came in at 30 cents, two cents above the estimate of analysts polled by Thomson Financial. On a comparable basis, the company earned 28 cents per share in the year-ago period.

CBS's shares rose 17 cents to $25.54 in morning trading on the New York Stock Exchange.

The most recent quarter's results included 1 cent per share in expenses from stock options, which companies are now required to report under new accounting rules. The per-share figures were higher due to lower share counts in the most recent quarter.

Revenues rose 3.9 percent to $3.58 billion from $3.45 billion a year ago.

CBS's television division, which includes the CBS network, a group of stations, a studio and a major syndication business, reported a 3 percent gain in operating income on a 5 percent increase in revenues.

The company cited a new cycle of syndication for ``Frasier,'' higher rate increases at its Showtime cable network and also the inclusion of results from CSTV, a college sports channel it acquired in January.

Operating income from outdoor advertising nearly tripled to $44.5 million as revenues rose 5 percent, reflecting a 10 percent rise in North American revenues offset partly by a 4 percent decline from its European holdings. Expenses also fell as the company exited lower-margin contracts for transit displays.

Radio remained soft. Revenues there fell 6 percent, which CBS attributed to further weakness in the radio advertising market as well as programming changes at 27 of its radio stations. Operating income fell 14 percent.

``Radio _ which has extremely valuable assets _ is our one segment that is not yet achieving acceptable growth,'' CBS' CEO Leslie Moonves said in a statement.

Moonves said the company was moving to revive the business with programming changes including the ``Jack'' and Spanish formats, and he said the company would ``actively adjust our portfolio'' as it seeks to revive growth.

On Monday CBS confirmed that shock jocks Greg ``Opie'' Hughes and Anthony Cumia would replace David Lee Roth in the morning slot that used to belong to Howard Stern, who jumped ship to Sirius Satellite Radio Inc. CBS has sued Stern, saying he improperly used air time to promote his move to satellite radio.

On a conference call with analysts and investors, Moonves said he did not expect any harm to come to CBS's radio ratings from the fact that Opie & Anthony also appear on XM Satellite Radio Holdings Inc. ``We don't think it hurts us one iota,'' Moonves said. He also said they would be allowed to mention XM on the air.

Opie and Anthony's show, a longtime rival to Stern's, was pulled from CBS Radio in August 2002 after they aired a live account of listeners having sex in St. Patrick's Cathedral. They were hired by XM in 2004.

In a note to investors, Sanford Bernstein analyst Michael Nathanson described the results as ``fairly average,'' given that profitability at the two largest businesses, television and radio, ``appear to be suffering.''

Nathanson said profitability at both CBS's radio and TV units were worse than expected. CBS chief financial officer Fred Reynolds said on the conference call that revenues at the CBS network grew just 1 percent in the quarter.
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