CBS confirms: It’s a tough economy


The multimedia giant says it’s taking steps to make sure when the economy turns, it will be primed to take advantage. That means a focus on quality content across all of its platforms, reduction of expenses and a prudent approach to capex, and a policy of hanging onto its cash to make sure that it can meet obligations whether or not there are any lenders around to help out.

To that end, the company’s quarterly dividend has been reduced from just over a quarter (27 cents) to a nickel.
Execs echo the standard corporate line to the effect that visibility is poor, but CBS expects to improve in the second half of 2009 regardless of economic conditions, thanks to improved bargaining power based on a stellar start to the 2008-2009 television season, the availability of hot programs ready for sale into syndication and other factors, including new retrans agreements with Verizon, Time Warner and Echostar. The company also expects to benefit from the foresight early in 2008, leading it to lower its cost structure in anticipation of the sour economy.

 “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come,” said Sumner Redstone, Executive Chairman, CBS Corporation. “But one thing that is clear to me is that Leslie and his team are managing our businesses superbly with an eye toward future growth. CBS’s strength as a content provider will continue to position it for success.”

“The marketplace was under increasing pressure throughout 2008, yet we were still able to deliver annual revenues of nearly $14 billion, adjusted operating profits of almost $2.8 billion and free cash flow of just under $1.7 billion – results that reflect the quality of our content and the enduring strength of our operations,” said Leslie Moonves, President and Chief Executive Officer, CBS Corporation. “As the contraction of the economy accelerated in the fourth quarter, our businesses were affected – in particular our local businesses – but we did not deviate from our ongoing strategy: to create winning content, regardless of the marketplace. At the same time, we continue to exercise a very disciplined approach to capital investment, and have taken substantial costs out of all of our businesses, in order to help margins going forward. We are confident that our considerable operational accomplishments will help position us to capitalize on growth opportunities as soon as the economy improves.”

4Q revenues decreased from $3.76B in 2007 to $3.53B in 2008; adjusted net earnings from continuing operations were $226.7M, or $.34 per diluted share compared to $382.5M or $.56 per diluted share previously. Free cash flow for the fourth quarter of 2008 increased to $308.3M from $122.4M for the same quarter last year primarily reflecting lower cash taxes and capital expenditures. For the full year 2008, CBS brought in $13.95B compared to $14.07B in 2007. Television was down -8% 4Q to $2.21B and down -1% for %8.99B for the full year; radio was down -18% for 4Q to $366.7M and down -12% to $1.54B for the year; and outdoor was down -15% to $526.3M 4Q and down -1% to $2.17B for the full year.