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CBS Posts Higher Earnings in 4Q - Broadcasting & Cable

CBS Posts Higher Earnings in 4Q

Updated: Profit comes despite lower advertising revenue
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Updated 8:30 p.m. ET

CBS reported higher earnings despite lower revenues and a flat ad market.

Fourth-quarter net revenue rose 30% to $370 million, or 55 cents a share, from $283 million, or 41 cents a share, a year ago despite a drop in revenue to $3.78 billion from $3.9 billion. Advertising revenues slid to $2.5 billion from $2.6 billion.

Revenue in the quarter was lower because a year ago the company had the second cycle syndication sale of CSI and significant political advertising. High-margin streaming income helped CBS' profits.

CBS CEO Les Moonves crowed that 2011 was a record year for the company and that he thought 2012 would be even better.

"We are seeing clear signs of the economy improving," the always-upbeat Moonves told analysts during CBS' earnings conference call Wednesday afternoon. "We're seeing this on a national level where scatter pricing is up mid-teens over upfront. And we're seeing in our local businesses, where pacing is up without even counting political, and where auto advertising, the number one category in local, is up an impressive high single digits."

While other media companies noted weak scatter demand, Moonves said CBS had shifted some of its scatter from fourth quarter to the first quarter and expected to achieve better pricing.

Asked about General Motors' decision to cancel 50% of its upfront ad buys in the second quarter, Moonves said overall, options remained normal levels.

"What General Motors did was de minimis and frankly, with our schedule being as strong as it is, we're having no trouble replacing the money at much higher rates," he said.

Political spending, estimated to be at least $2 billion this campaign, will also help CBS' local TV and radio stations. "It is clear this is not going to be a very pleasant campaign. While it may not be very much fun for the politicians, it should be very good for us at CBS."

Moonves noted that CBS has the next Super Bowl, and that he anticipates getting $4 million a spot. He added that he expects the network's new billion-dollar deal with the NFL to be "profitable from day one."

He also bragged about the performance of CBS in primetime, including the hit comedy The Big Bang Theory. "The Big Bang Theory is now often beating a previously invincible talent show that happens to air on another network," he said.

Despite flat revenues, CBS was able to increase its profits in part by controlling costs. Moonves noted that because of its strength in primetime, CBS would be making only 16 pilots, and will probably add fewer new shows to its lineup than the five freshmen it fielded in 2011-12. "Some of our competitors are doing over 30 pilots. So, in certain instances, I would state that our development expenses are less than some of our competitors by over $100 million," he said.

In addition to advertising, Moonves noted that CBS now has revenue streams that will grow next year, including retransmission consent, reverse comp from affiliates and streaming from subscription VOD services including Netflix, Amazon and Hulu Plus.

Operating income at CBS' entertainment unit, which includes the CBS Television Network and its studio and syndication company, rose 28% to $318 million. Revenues for the entertainment segment were down 1% to about $2 billion.

Operating income for CBS' cable networks rose 4 % to $175 million as revenues rose 7% to $395 million. Local broadcast revenues were down 12% to $721 million. Operating income fell 17% to $266 million.

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