CBS Fourth-Quarter Sales Miss Analysts’ Views on Advertising Dip

CBS Profit Climbs 31% on Growth in Fees
Signage is displayed on the CBS Corp. Television City building in Los Angeles.. Photographer: Jonathan Alcorn/Bloomberg

CBS Corp., owner of the most-watched U.S. television network, posted fourth-quarter sales that missed analysts’ estimates as advertising declined.

Revenue slid 3 percent to $3.78 billion, missing the $3.9 billion average of 21 estimates. Net income climbed 31 percent to $370 million, or 55 cents a share, on higher fees from pay-TV systems and affiliate stations, New York-based CBS said yesterday in a statement.

The absence of political ads contributed to lower revenue. CBS, home to 19 of the 25 most-watched prime-time programs last week, is getting more money from pay-TV systems and affiliates for its programs, which boosts margins, according to Michael Morris, an analyst at Davenport & Co. That helped counter falling ad sales and a drop in revenue from rerun syndication.

“Diversifying our business is paying off and only getting better,” Chief Executive Officer Leslie Moonves said yesterday on a conference call.

CBS, controlled by Chairman Sumner Redstone, fell as much as 2.8 percent to $28.75 in extended trading. The stock lost 0.8 percent to $29.54 at the close yesterday in New York and is up 8.8 percent this year.

Excluding items, profit of 57 cents beat the 53-cent average of 24 analysts’ estimates compiled by Bloomberg.

Revenue from affiliates and pay-TV services increased 8 percent to $460 million, according to the company statement, while advertising sales slipped 4.4 percent and content licensing shrank 4.8 percent.

CBS’s Share

The company expects to receive 9 percent to 10 percent of total political spending, Moonves said on the call. Campaigns may spend $2.6 billion by the time polls close Nov. 6, Barclays Capital analyst Anthony DiClemente estimated last month.

Operating profit from the entertainment division, which includes the CBS network and studios, gained 32 percent to $275 million on revenue that was little changed at $2 billion. The company is consolidating operations at its TV and radio stations to reduce costs.

This quarter, demand for TV ads pushed rates for commercials up in the “mid-teens” on a percentage basis, Chief Financial Officer Joe Ianniello said on the call.

In 2011, CBS’s international sales of TV shows exceeded $1 billion for the first time, Moonves said. CBS is in talks to produce an original program for Netflix Inc., he said.

Cable Profit

Cable networks, led by the Showtime premium channel, posted a 3.7 percent gain in income to $169 million. Sales advanced 7.3 percent to $395 million. Showtime had more than 21 million subscribers at the end of 2011, Moonves said.

Profit from local broadcast operations slid 18 percent to $242 million, reflecting lower political spending and lost revenue from the labor dispute that stopped professional basketball.

At Simon & Schuster publishing, profit rose 50 percent to $27 million on $229 million in sales, fueled by purchases of the Steve Jobs biography. The billboard unit’s profit climbed 81 percent to $76 million on $514 million in revenue.

CBS spent $170 million repurchasing 7 million shares during the period. The company plans to buy at least $1 billion of its shares every year, Moonves said. CBS had $660 million in cash as of Dec. 31, 38 percent more than a year ago.


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