CBS Corp. Reports Slow Growth in Third Quarter

By Caroline Palmer -- Broadcasting & Cable, 11/2/2006 12:40:00 PM

CBS Corp. reported a marginal increase in profit on slightly higher revenues of $3.4 billion due in large part to weak advertising in the radio and television divisions.

Cash flow, defined as operating income before depreciation and amortization, increased 3 percent to $755.9 million. Net earnings increased 26 percent to $323.6 million in the third quarter.

Television revenues decreased from the previous year to $2.2 billion because of lower advertising and home entertainment sales.The loss of the Primetime Emmy telecast and the shuttering of the UPN brought advertising revenues down by three percent.Licensing fees increased, however, due to the sale of CSI: Miami and higher foreign syndication revenues.

Radio revenues declined 6 percent to 508.1 million due to a weak advertising market and programming changes at 27 CBS owned radio stations.

The company was aided by the outdoor advertising business, whose revenues increased 9 percent to $536.2 million from $493.5 million. North America produced a 9 percent growth in U.S revenues, including a 13 percent increase in the U.S billboard business.

On the publishing side, higher sales and distribution fees amounted to a 2 percent increase in revenue to $197.4 million up from $193.2 million the previous year.

The results fell below most analysts expectations this quarter. CBS “appears to be struggling for the second consecutive quarter to achieve even anemic growth,” says Anthony Noto of The Goldman Sachs Group Inc.

Despite the weak numbers, CBS Executive Chairman Sumner Redstone said the company is “right on track.”

“CBS Corporation is right on track.. We remain committed to escalating shareholder value as we continue to drive our business forward.”