CBS Sags As TV Ads Go Flat

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Caught in a softening ad market, CBS’s broadcast network and TV stations generated no growth in advertising during the second quarter.

For the three months ended June, CBS’ companywide revenue dropped 5% to $3.4 billion, while operating income dropped 6% to $858 million. Almost half the decline stemmed from $24 million in expenses tied to the shutdown of TV network UPN, whose hit programs are being combined into a new network The CW.

Total revenue at the TV division fell 1% to $2.2 billion, while operating income fell 2% to $535 million. Much of that decline stems from a shift in distribution of DVDs of CBS-owned shows, which is now handled by Viacom’s Paramount Pictures, which split off from CBS in January.

The company didn’t fully detail ad results, but acknowledge that CBS network ad revenues fell 1.5%, partly because the network lacked big sales from previous year’s finale of Everybody Love Raymond. However, CBS President Fred Reynolds also acknowledged that the scatter market was fairly soft.

On a conference calls to discuss the earning, CBS Chairman and CEO bristled over questions about problems in the upfront ad market. “There’s a myth out there that the upfront market was down,” Moonves said. ABC, CBS, NBC, Fox and The CW combined for $9.05 billion in advance sales down from $9.1 billion a year ago.

Much of the decline came from the merger of WB and UPN into The CW. “We went from a universe of six networks to a universe of five,” Moonves says. (That doesn't take into account the creation of Fox’s MyNetworkTV.) “We didn’t view it as anemic; four of the five networks did very well,” Moonves says. The exception was NBC. “We were actually quite encouraged by it.”

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