CBS Earnings Rise 8% in Q3

Declines in TV, Radio Offset by Increases in Outdoor Advertising, Publishing

CBS’ revenue dipped slightly as declines in television and radio were offset by increases in outdoor advertising and publishing.

The company’s earnings for the third quarter of 2007 were up 8%.

CBS posted overall revenues of $3.3 billion, a 3% drop from $3.4 billion the same quarter a year ago. The decline reflects the sale of radio and television stations, lower television license fees and the absence of UPN, which was shuttered in September 2006.

Television revenues were down 3% to $2.08 billion from $2.15 billion on a 9% drop in television license fees and a 4% drop in advertising revenue. Radio revenue was down 12% to $445.7 million from $508.1 million. The gap was attributed to the sale of 10 stations and weak advertising revenue. Outdoor revenue was up 3% to $552.2 million in Q3, while publishing jumped 9% to $214.2 million.

CBS’ net earnings in the third quarter rose 8% to $343.3 million, up from $316.9 million in Q3 2006. Earnings per share were $0.48 versus $0.41 and street expectations of $0.43.

The company’s free cash flow in the quarter was $265.5 million versus $431.8 million a year ago. The lower cash flow was due to lower tax refunds and cash-interest income, higher capital expenditures and the timing of programming investments.

"In the third quarter, we once again delivered on our promise to return capital to shareholders while driving solid EPS growth," CBS president and CEO Leslie Moonves said in a statement. "The operating performance of our core businesses delivered the healthy free cash flow that allowed us to raise our quarterly cash dividend to an annualized $1 per share and repurchase an additional $1.6 billion of our stock during the quarter.”

CBS expects full-year-2007 revenues to be down 2%-3% on the divesture of the station operations and UPN, as well as the loss of several outdoor-transit contracts. Operating income is expected to be comparable to 2006, according to the company, due to these factors and higher expense for stock-based compensation. The company sees long-term revenue growth rates in the low to single-digits, operating income in the mid-single digits and earnings per share in the high single-digits.