Television ad revenues were down 14% in Q3 for CBS Corp., but the company attributed much of that to competing with the Olympics on NBC and the lack of ad revenues from covering the political conventions and presidential debates. In all, the television division still saw revenues increase 2% for the quarter, including the big cable syndication sale of “CSI New York.” CEO Les Moonves celebrated the fact that CBS is #1 in the new season for the first time in 20 years and said national advertising is holding up, with only minimal cancellations from deals made in the upfront.
Not only is CBS topping the ratings, but Moonves quipped that “rumors of The CW’s demise have been greatly exaggerated,” noting the improved ratings for some of the network’s top shows. So, in the face of a tough advertising environment, the networks are holding up and the CEO said the TV division is capitalizing on other growth opportunities with Showtime, syndication and retransmission consent negotiations. CBS is currently in retrans talks with several major MSOs and Moonves said he was encouraged by the just-completed agreement between LIN TV and Time Warner Cable demonstrating the necessity for cable to be willing to pay for broadcast network programming.
The area of weakness, of course, is local advertising, affecting radio, the O&O TV group and outdoor at CBS Corp. “We’ve anticipated this slowdown for some time and have taken proactive measure by reducing capital and operating costs going back to last year. We will continue to right-size our businesses as we move forward as well,” Moonves said.
Like so many broadcasting companies, CBS had to reassess the value of its FCC licenses, goodwill and such and took a non-cash pre-tax impairment charge of $14.12 billion in Q3. Net earnings from continuing operations fell to a loss of $12.46 billion for the quarter, versus a positive number of $340.2 million a year ago.
Television division revenues rose 2% to $2.08 billion, but operating income before depreciation and amortization (OIBDA) fell 15% to $414 million.
Radio revenues fell 12% to $392.5 million, a drop of 11% on a same stations basis. OIBDA dropped 18% to $139.4 million. Moonves said the company has received attractive bids for some of the 50 or so middle market radio stations it has up for sale, but he can’t predict when any deals will get done due to the tough financing markets. Those divestitures are part of what he says is a strategic decision to move from slow-growth assets to fast-growth assets.
With its recent purchase of CNET, CBS Corp. reported its interactive division on a separate line for the first time. Revenues were $140.7 million and produced OIBDA of $2.5 million.
With its stock price currently hovering around nine bucks, CBS Corp. is paying a hefty dividend of 12% to shareholders and some on Wall Street have questioned whether that can be sustained. Both Moonves and Chairman Sumner Redstone sought to reassure investors that the company plans to maintain its dividend, with Moonves calling it a “front and center” issue.