CBS Reports Loss After Write-Downs

'CSI:New York' syndication sales help offset struggling marketplace
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CBS Corp. announced revenue of $3.38 billion for the third quarter, a 3% uptick from the same period a year ago. CBS cited syndication revenue from CSI: New York and its acquisition of CNET Networks as factors in the revenue growth.

“In the current economy, every company must keep a firm eye on costs and manage each business with distinction,” said CBS Corp. Executive Chairman Sumner Redstone “Leslie [Moonves] and his team are doing just that, and I’m confident that they will continue to position CBS for success now and in the future.”

Revenue in the television segment was $2.1 billion for the quarter, up 2%. Affiliate revenues increased 6% while television advertising revenue dropped 14%, which CBS attributed to being up against the Olympics this past summer and limited advertising in the election debates. Television OIBDA and operating income, in each case before impairment charges, were down 15% to $414.0 million and 17% to $368.6 million, respectively, for the third quarter of 2008 primarily due to lower advertising sales partially offset by profits from the cable syndication sale of CSI: New York and higher affiliate revenues.  

President/CEO Moonves cited the importance of strong content in a tough economic climate. “Our strategy is to grow our businesses for the long term by creating the best possible content, while keeping our commitment to providing very attractive dividends that offer value to our shareholders,” he said. “We are confident that this will produce value and stability in today's marketplace and solid growth as the economy begins to improve.”

Moonves added: “Our strong year-to-date free cash flow of $1.4 billion enables us to strategically invest in our businesses and is more than sufficient to pay our dividend. At the same time, we believe that in good times and bad, remaining leaders in the content we produce is all-important. That is why we are particularly pleased that for the first time in more than twenty years, the CBS Television Network is #1 in all key categories through the first five weeks of the season, and well-positioned to drive future results.”

On an adjusted basis, operating income before depreciation and amortization (“OIBDA”) for the third quarter of 2008 was $665.2 million compared with $786.9 million for last year’s third quarter. Adjusted operating income was $538.8 million versus $675.1 million for the same quarter last year. In both cases, higher profits from growth in syndication sales were offset by lower advertising sales and higher operating costs at Outdoor.

Adjusted net earnings from continuing operations were $290.3 million for the third quarter of 2008 versus $357.8 million for the same quarter last year, reflecting lower adjusted operating income. Adjusted diluted earnings per share were $.43 in 2008 compared to $.50 in 2007. Lower adjusted operating income was partially offset by lower shares outstanding resulting from 2007 share repurchases.

As was previously announced, as a result of adverse market conditions, CBS Corp. performed an interim impairment test on its existing goodwill and intangible assets for all reporting units during the third quarter of 2008. This analysis resulted in a pre-tax non-cash impairment charge of $14.12 billion. Due principally to this non-cash impairment charge, reported OIBDA for the third quarter of 2008 was a loss of $13.48 billion and operating income was a loss of $13.62 billion, versus OIBDA of $757.6 million and operating income of $645.8 million for the same quarter last year.

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