CBS Corp.’s TV Unit Assists Modest Q1 Profit Increase

Apr 26, 2006  •  Post A Comment

CBS Corp. posted first-quarter net income of $226.9 million Wednesday, up slightly from a year ago, as gains at the company’s television and outdoor advertising businesses overcame a decline at the radio unit.

On a per-share basis, CBS’s results, which include $4 million in stock-option compensation expenses, earned a profit of 30 cents, compared with 28 cents per share a year ago. The numbers beat Wall Street’s estimate of a first-quarter profit of 28 cents per share.

“Television results were solid,” said Merrill Lynch analyst Jessica Reif Cohen in a research note. “The biggest driver in the quarter was the second-cycle sale of ‘Frasier’ in syndication. … The sale was more than enough to offset what we believe was relative weakness at the network, which was challenged due to competition from the Olympics and CBS’s decision not to put first-run programming up against the games.”

Revenue rose 4 percent to $3.6 billion, propelled by growth at the company’s television operation and outdoor advertising unit.

The financial results mark the first time CBS Corp. has reported earnings since Sumner Redstone’s Viacom was broken into two separate companies at the end of last year, with CBS taking the broadcasting assets and a new Viacom taking the cable and film production businesses. It also represents the first test of CBS Corp. CEO Leslie Moonves’ leadership of a publicly traded company.

Viacom, which is led by CEO Tom Freston, is scheduled to report earnings May 11.

Within the CBS TV unit, which includes the CBS Television Network, a syndication operation and cable networks Showtime and CSTV, revenue rose 5 percent to $2.5 billion, while segment profit climbed 3 percent to $383 million. The company said the gains reflected a 55 percent jump in television syndication revenue related to the “Frasier” sale and affiliate-fee growth, up 6 percent in the quarter, at cable networks CSTV and Showtime.

Those results helped to offset a 6 percent decline at CBS Radio, which has experienced difficulty since the departure of radio personality Howard Stern, combined with the failure of Mr. Stern’s replacement, rocker David Lee Roth, to connect with listeners. The company recently replaced Mr. Roth with the radio duo Opie and Anthony.