CBS Reports Net Loss of $55.3 Million

TV ad sales drop $229 million in the quarter

CBS recorded a net loss of $55.3 million for the first quarter of 2009, compared with a profit of $244 million in the prior year period. In a statement this afternoon, CBS Chief Executive Leslie Moonves joined a chorus of rival media executives in predicting easier times ahead. In the earnings statement, Moonves alluded to, “early signs of an improving local advertising marketplace.”

Ad sales decreased 15% in the company’s television unit, which incorporates the CBS network and the TV stations group, as well as CBS College Sports Network and pay-TV company Showtime. Advertising sales at CBS Corp’s TV unit were $1.3 billion, 58% of the unit’s total revenue of $2.2 billion. The figure was down $229 million to $1.53 billion in the period a year ago.

Television revenue was down 12% to $2.23 billion from $2.54 billion on lower ad sales and TV license fees. Home entertainment revenue bucked an industry wide decline however, rising 69%. Affiliate fees were also higher, up 9% on subscriber growth and rate increases at Showtime Networks and CBS College Sports Network. Operating income in television was down 54% to $184.7 million for the first quarter.

CBS Corp. revenue was $3.15 billion against $3.65 billion in the first quarter of 2008. Company wide operating income was $107.5 million versus $524.2 million for the quarter to March 31.

Speaking on the earnings call, CBS CFO Fred Reynolds said the CBS
network saw an 8.6% fall in ad sales, but did not detail the decline at
local stations.

Reynolds said it was too early to discuss third quarter option taking.
Discussing the ad market, he said: "We're seeing a lot of categories are
coming back in...Auto is coming back but not at the sales we had last
year. They're spending more in May than they were 60 days ago. We're
adding more dollars locally and network scatter is stronger than it was
6-8 weeks ago."

"With our local TV stations, we had no idea of the depth or length of
recession. The economy peaked in the third quarter of 07. Most
companies feel more comfortable taking a little more risk to spend ad
dollars which is a leading indicator."