CBS net falls but operating earnings rise on television, outdoor advertising

Thursday, November 2nd 2006, 9:40 am
By: News On 6

NEW YORK (AP) _ CBS Corp.'s third-quarter net income fell sharply from a year ago when it was still combined with Viacom Inc., but earnings from its continually owned businesses jumped 26 percent, the media company reported Thursday.

Stronger results in television, outdoor advertising and lower interest expenses due to falling debt levels propelled the earnings from continuing operations higher, offsetting weakness in radio.

On a reported basis, CBS earned $316.9 million or 41 cents per share, in the three months ended Sept. 30 versus $708.5 million, or 90 cents a share, a year ago when it was still reporting as a combined company.

Earnings from continuing operations _ accounting for the split from Viacom and also the sale of its Paramount Parks business _ rose to $323.6 million, or 42 cents a share, from $256.9 million, or 33 cents per share, a year ago.

Analysts polled by Thomson Financial had been expecting earnings of 40 cents per share.

Revenues edged higher to $3.38 billion from $3.37 billion. Analysts had been expecting $3.43 billion.

A good portion of the improvement in earnings resulted from a 19 percent decline in interest expense and a jump in interest income, which rose to $41.4 million from $5.4 million due to CBS's ballooning cash stockpile.

Operating earnings before interest payments, depreciation and amortization rose 3 percent to $755.9 million, as gains in outdoor advertising and television outweighed a decline in radio earnings.

CBS's shares slipped 8 cents to $28.73 in early trading on the New York Stock Exchange.

CBS is now sitting on $3.2 billion in cash, up from $1.7 billion a year ago, following good operating results and the sale of its Paramount Parks business and a group of radio stations. Investors have been pressing CBS to spell out its plans for using that cash.

On Thursday, CBS CEO Leslie Moonves told analysts on a conference call that the company would ask its board to approve a stock buyback next year of between $1 billion and $1.5 billion.

Moonves also said the company would continue to look for smaller acquisitions, contribute more to its pension plan and continue to increase its dividend in line with earnings growth. But he stressed that the company has ``no plans'' for major acquisitions.

Earnings from television, which includes CBS, a group of TV stations, a syndication business and other assets, grew 9 percent on lower programming expenses, though revenues were essentially flat, held back by a 3 percent decline in advertising revenues.

CBS shut down its unprofitable UPN network this year and now co-owns The CW network with Time Warner Inc.'s Warner Bros. Entertainment unit.

Outdoor advertising revenues rose 9 percent, though 2 percentage points of that gain was due to currency fluctuations. Earnings rose 20 percent.

Radio remained a weak spot for CBS, with earnings falling 10 percent on a 6 percent decline in revenues. CBS attributed the revenue decline to programming changes at 27 of its stations as well as overall weakness in the radio advertising market.

In May CBS said it would sell stations in 10 of its smaller markets, and to date the company has sold 29 stations in 8 of those markets for $570 million.