11 May 2010

CBS Loss Narrows as Advertising Revenue Rebounds

Bloomberg / Business Week

CBS Corp., owner of the most-watched U.S. broadcast network, reported a narrower first-quarter loss as advertising sales rebounded.

The net loss of $26.2 million, or 4 cents a share, reflects restructuring and tax related costs, and compares with a loss of $55.3 million, or 8 cents, a year earlier. Sales gained 12 percent to $3.53 billion, New York-based CBS said today in a statement. That exceeded the $3.45 billion average of 14 analysts’ estimates compiled by Bloomberg.

CBS, which generates two-thirds of its revenue from ads, is benefiting from increased marketing by automotive and financial services companies, Anthony DiClemente, an analyst at Barclays Capital in New York, said in an April 23 report. CBS and Time Warner Inc.’s Turner Broadcasting announced a $10.8 billion deal last month to share the cost of carrying the March Madness college basketball tournament.

“Unlike other media companies, margins did not outperform at CBS,” David Joyce, an analyst at Miller Tabak & Co. in New York, said in an e-mail. Revenue beat estimates as all divisions aside from publishing gained, he said.

The results included $57.1 million in restructuring charges and $25.9 million in tax items, according to the statement.

Excluding some items, earnings of 5 cents a share matched the average of 16 analysts’ estimates compiled by Bloomberg.

Entertainment Unit

CBS, controlled by Chairman Sumner Redstone, fell 48 cents, or 3 percent, to $15.10 in extended trading after the results were announced. The shares dropped 62 cents to $15.58 at 4 p.m. in New York Stock Exchange composite trading and have gained 11 percent this year.

CBS and Time Warner’s CNN cable-news channel have discussed ways to cooperate for years, CBS Chief Executive Officer Les Moonves said today on a conference call. Time Warner CEO Jeff Bewkes today said he expects CNN to reach an agreement with a partner within the next year.

Revenue in the entertainment unit, which includes the television network, rose 15 percent to $2.1 billion, reflecting a 25 percent rise in TV ad sales following the broadcast of the Super Bowl. Publishing revenue fell 6 percent to $151.7 million because of the “continued soft retail market.”

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