May 3 (Bloomberg) -- CBS Corp., owner of the most-watched U.S. television network, said first-quarter profit fell 9 percent on a slide in earnings from TV and tax expenses from the sale of radio stations.

Profit from continuing operations dropped to $213.5 million or 28 cents a share, from $226.9 million, or 31 cents a share, a year earlier. Sales rose 2.3 percent $3.66 billion, New York- based CBS said today in a statement.

Television profit fell 9 percent from the same period last year, when the company had a gain on the syndication of the comedy ``Frasier.'' The sale of radio stations and ``weakness'' in radio advertising prompted a 4 percent drop in profit, CBS said. Chief Executive Officer Leslie Moonves plans to generate sales by putting more CBS shows on the Internet.

``The core of the business is TV and radio, and they were not that impressive,'' said Michael Nathanson, an analyst at Sanford C. Bernstein & Co. in New York. He has a ``market perform'' rating on the stock and doesn't own the shares.

The sale of radio stations in four markets created a tax expense of $43.5 million in the quarter. The results exclude the Paramount Parks unit that was sold in June and the UPN network, which was combined with the WB network to form the CW network in September.

Profit in 2007 will be ``comparable'' to that of 2006, CBS said today.

Excluding one-time costs, profit of 33 cents a share beat the 32-cent average analyst estimate of 18 analysts in a Bloomberg survey. Revenue beat the $3.62 billion estimate.

`Not Dead'

CBS shares rose 25 cents to $32.06 at 4:03 p.m. in New York Stock Exchange composite trading. They have risen 2.8 percent this year.

``TV is not dead,'' said Kit Spring, a Denver-based analyst at Stifel Nicolaus & Co. He has a ``buy'' rating on the stock and doesn't own CBS shares. ``There's an overreaction to technology changes and to the ratings decline. CBS remains a very popular network.''

Moonves plans to compensate for slowing revenue growth in television and radio by expanding its cbs.com Web site and forging agreements with other sites to distribute its programs throughout the Internet. CBS announced deals with 10 companies last month, including AOL and Microsoft Corp.'s to distribute its shows. CBS put its programs on Google Inc.'s YouTube in October.

The company doesn't break out its online revenue.

`Inferior'

Revenue from television, the largest division, rose 2 percent to $2.6 billion. Operating profit dropped to $350.1 million. Excluding the Super Bowl, advertising revenue at the CBS network fell 5 percent in the first-quarter.

CBS's revenue growth is ``inferior,'' even with the benefit of the February Super Bowl football championship, Goldman Sachs Group Inc. analyst Anthony Noto said in a note to clients today. He has a ``sell'' rating on the stock.

``The deterioration in TV ad revenue should continue to get worse,'' Noto said.

While CBS is the top-rated network among total viewers, its network primetime ratings excluding sports are down 12 percent among viewers in the 18 to 49 age group coveted by advertisers, according to Nielsen Media Research. The network has lost ground to ABC, which has the drama ``Grey's Anatomy,'' and Fox, which has ``American Idol.''

CBS will reap more money this year by including shows watched on digital-video recorders in its advertising rates, Moonves said. About 7 percent of viewers in the 18 to 49 and the 25 to 54 age groups use DVRs, he said.

``This year those people will be counted, and we'll be paid for them,'' Moonves said on a conference call with investors today.

Radio Declines

Radio revenue fell 9 percent to $397.5 million, reflecting the sale some stations, CBS said. Operating profit dropped to $156.8 million. Radio revenue trends are ``anemic,'' Noto said.

The company named veteran executive Dan Mason to replace Joel Hollander as chief executive officer of CBS Radio on March 26.

Days before Mason was scheduled to take over in April, CBS Radio fired talk-show host Don Imus after his racially charged comments sparked protests from civil-rights leaders and advertisers.

Outdoor revenue increased 2 percent to $462.3 million and operating profit rose 6 percent to $47 million. Revenue in North America fell after the loss of contracts in New York and Chicago.

Publishing, which contains the Simon & Schuster book business, posted an increase in revenue to $229.3 million on sales of ``The Secret'' by Rhonda Byrne, which was highlighted on Oprah Winfrey's talk show.

Sales were also driven by ``The Best Life Diet,'' by Bob Greene and ``Nineteen Minutes,'' by Jodi Picoult. Operating profit rose to $21.4 million from $3.7 million.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net.

Last Updated: May 3, 2007 16:24 EDT