April 29 (Bloomberg) -- CBS Corp., owner of the second most watched U.S. broadcast network, reported first-quarter profit rose 14 percent on sales of its ``CSI'' crime series abroad. The company raised its quarterly dividend and the stock gained.

Net income increased to $244.3 million, or 36 cents a share, New York-based CBS said today in a statement. Sales were little changed at $3.65 billion, beating the $3.52 billion average of 11 analysts' estimates compiled by Bloomberg.

Revenue from ``CSI,'' as well as syndication fees for the show ``Everybody Loves Raymond,'' helped CBS post an unexpected increase in sales at the television unit and made up for a 15 percent drop in advertising. Profit also gained after a 100-day writers strike temporarily lowered production costs.

``It shows CBS is holding its own despite the recessionary advertising environment in the U.S.,'' said Fred Moran, an analyst at the Stanford Group in Boca Raton, Florida. He recommends holding CBS shares and doesn't own them. ``The yearly dividend is now a 5 percent yield, and it's one of the cheapest stocks in the media group.''

The quarterly dividend increased to 27 cents from 25 cents previously. The company reiterated a forecast for 3 percent to 5 percent growth in operating income this year.

CBS prefers returning cash to shareholders through dividends, Chief Financial Officer Fred Reynolds said. Last year the company bought back shares with proceeds from the sale of its theme-park business and other assets, he said.

Dividends

``When cash for shareholders is there, the dividend is the right way to distribute it,'' Reynolds said.

CBS rose 66 cents, or 2.9 percent, to $23.20 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has dropped 15 percent this year.

Analysts anticipated earnings of 33 cents a share for the quarter. A year earlier, net income was $213.5 million, or 28 cents.

TV revenue advanced 1 percent, beating an estimate for a 4.5 percent drop by JPMorgan Chase & Co. analyst John Blackledge. The 85 percent jump in TV license fees fueled the increase, including a new international distribution arrangement for the ``CSI'' franchise. Operating profit at the division gained 15 percent to $402.1 million.

Last month, Fox passed CBS in total viewers for the season by luring audiences with football and its ``American Idol'' singing competition. Last year, CBS broadcast the National Football League's Super Bowl championship, the most-watched event televised in the U.S. Fox carried the game this year.

Ratings Race

``We will continue to compete for first place among viewers for the rest of the season,'' Chief Executive Officer Leslie Moonves said on a conference call today.

Ratings for the CBS shows ``Two and a Half Men,'' ``CSI: Miami'' and others have rebounded since TV writers returned to work in February. Audiences at CBS, the first network to air new episodes after the walkout ended, fell 19 percent during the work stoppage, the most of any broadcast company.

Moonves said he's ``optimistic'' an agreement with the Screen Actors Guild, whose contract expires June 30, will be reached without another strike.

The radio division's operating profit fell 27 percent to $115 million on declining revenue. By the end of the year, Blackledge predicts, the outdoor-advertising business will surpass radio as the second-biggest contributor to CBS's operating profit after TV.

Outdoor

The outdoor unit posted a 7 percent rise in revenue in the quarter to $496.9 million, while operating profit fell 6.2 percent to $44.1 million on higher billboard lease and transit costs and depreciation expense due to capital expenditures.

Last week, CBS paid $110 million for Montevideo, Uruguay- based International Outdoor Advertising. Already the largest owner of billboards in North America, CBS added 17,000 locations in Argentina, Brazil, Uruguay and Chile.

Earnings at CBS's publishing division, which includes Simon & Schuster, fell 32 percent after record sales a year earlier on best-selling titles such as ``The Secret'' by Rhonda Byrne.

Showtime, which added 1.3 million subscribers in the quarter, will save $300 million a year by ending contracts to air films from Viacom Inc.'s Paramount Pictures, Metro-Goldwyn- Mayer Inc. and Lions Gate Entertainment Corp., Moonves said. The savings will be used to create new original programs, which have been the source of new subscribers, he said.

Led by Paramount, the studios announced plans this month to create a pay channel to compete with Showtime. With CBS producing feature films and Viacom building a premium channel, the two companies that share Sumner Redstone as chairman and largest shareholder are becoming more competitive.

Redstone said on the conference call that he believes the competition is good and that he supports Moonves and Viacom CEO Philippe Dauman.

``Les's strategy will work for CBS and Philippe's strategy will work for Viacom,'' Redstone said. ``Success for these two companies is not mutually exclusive.''

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Tim Mullaney in New York at Tmullaney1@bloomberg.net.

Last Updated: April 29, 2008 16:08 EDT