Earnings rise, dividend doubled at CBS


Revenues were essentially flat in Q1, despite the lack of the Super Bowl this year, but profits shot skyward for CBS Corporation. The company’s board of directors had more good news for shareholders: the quarterly dividend has been doubled.

The new quarterly dividend is 10 cents per share, up from a nickel, to be paid July 1st to shareholders of record on June 10th.

“CBS’s first quarter performance demonstrates the extraordinary momentum we have created in our businesses,” said Sumner Redstone, Executive Chairman, CBS Corporation.  “Our industry-leading content and multi-platform distribution continue to provide a competitive advantage that fuels our ongoing success.  Going forward, I am very confident that the strategies employed by our management team will propel us to even greater heights throughout the rest of the year and beyond.”

“Across the board, this was an exceptionally strong quarter for CBS, giving us a tremendous start in 2011,” said CEO Les Moonves. “Our first quarter performance was driven by strong underlying advertising revenue growth and increases in non-advertising revenue streams, as we continue to maximize the value of CBS’s world-class content. In addition, the strategic actions taken to strengthen our business model, including CBS Television’s new NCAA agreement, have helped deliver yet another consecutive quarter of year-over-year margin expansion.  We are particularly pleased with our substantial free cash flow generation, and we remain committed to returning a substantial portion of this cash to shareholders through the combination of share repurchases and dividends. Looking ahead, we have great momentum heading into this year’s Upfront marketplace, and we continue to enter into lucrative retransmission, syndication and online distribution deals.  As we increasingly capitalize on these opportunities, we are confident that we will drive growth over the long term by focusing on our strategy to drive higher recurring revenue streams and diversify our businesses while delivering value to our shareholders,” he added.

Revenues in Q1 were down less than 1% to $3.51 billion, but operating income before depreciation and amortization (OIBDA) shot up 64% to $$576 million. Free cash flow was up 29% to $853 million.

Local broadcasting revenues rose 2% to $621 million. Despite the lack of the Super Bowl, revenues were up 1% for the TV O&O group, while CBS Radio revenues rose 4%. Local broadcasting OIBDA rose 26% to $169 million.

For Q2, the company says the TV group is pacing up in the low single digits, led by national advertising, and radio is up in the mid single digits, led by automotive and retail.

Entertainment revenues (including the CBS network, syndication and studios) were down 4% to $1.99 billion, reflecting the lack of the Super Bowl and a new NCAA deal that put some of the games on Turner’s cable nets. Entertainment OIBDA shot up 85% to $268 million. That was attributed to higher margins for primetime advertising and the more profitable NCAA deal.

RBR-TVBR observation: Business is about profits and it looks like CBS is doing a good job of increasing profits on the bottom line, regardless of what’s happening on the top line. When CBS and Viacom separated the CBS side was touted as a dividend play for investors, so the big dividend increase should be welcome news on Wall Street.