UPDATE 3-CBS posts surprise loss as ad sales plunge

* Q1 loss 8 cents per share vs Wall St view 7-cent profit

* Q1 rev $3.16 bln, below Wall St view $3.27 bln

* Sees stronger second half of the year

* Shares down as much as 13 percent in post-market trade (Adds executive comments)

By Paul Thomasch

NEW YORK, May 7 (Reuters) - CBS Corp (CBS.N) reported a surprise quarterly loss and revenue that was well short of expectations as severely depressed advertising sales killed any chance that its hit TV shows would keep it profitable.

Shares of CBS dropped as much as 13 percent in post-market trade after the results, adding to declines this year that have seen the stock underperform rivals Viacom Inc VIAb.N, Time Warner Inc (TWX.N) and Walt Disney Co (DIS.N).

Results from those companies have been salvaged by the relative stability of their cable networks, where revenue is generated by both advertising and affiliate fees.

CBS's cable business is limited by comparison, depending largely on pay TV network Showtime.

Instead, CBS focuses on businesses like its broadcast television network, local television stations, and radio and outdoor advertising, all of which have been hard hit as advertisers have cut spending in the weak economy.

The crash in advertising spending was reflected in the company's first quarter loss of $55.3 million, or 8 cents per share. That was down from a profit of $244.3 million, or 36 cents a share, in the period a year earlier.

Revenue fell to $3.16 billion from $3.65 billion, a greater-than-expected drop for the only TV broadcast network to post increases in its prime-time audiences during the latest season. TV revenue fell 12 percent.

Analysts had expected CBS -- home to shows like "The Mentalist" and "60 Minutes" -- to earn 7 cents per share on revenue of $3.27 billion, according to Reuters Estimates.

"Not only has the advertising marketplace been particularly challenged recently, but this time last year, it was still relatively robust," Chief Executive Les Moonves said on a conference call.

ENCOURAGING TRENDS

But Moonves and Chief Financial Officer Fred Reynolds also took pains during the call to encourage analysts, investors and media to look ahead to what they said would be stronger results later in the year.

"We have confidence that the second half of '09 will be much stronger than the first half," Moonves said on the call.

He pointed to a string of popular shows sold into syndication for later this year, including "Criminal Minds" and "Medium," and, perhaps most important for the industry, indications that advertisers are again opening checkbooks.

"We are seeing early signs of improvement in the advertising market place both locally and nationally," Moonves said.

"In each of the last several weeks, we have seen sales pacing improve. It is premature to call it a full recovery, but the trends are encouraging particularly on -- as we look to the back half of the year."

CBS said it expects full-year 2009 operating income before depreciation and amortization -- a key measure of profitability in the media business -- of $1.73 billion to $1.93 billion. In the first quarter, OIBDA fell 61 percent to $249.8 million.

The company's 2008 OIBDA before impairment charges was $2.55 billion.

A recovery in what has been the worst slump in advertising since the 1980s has been a major theme for media companies during the current earnings season.

News Corp (NWSA.O), Viacom, Disney and others have suggested the worst may be behind them.

Still, CBS's Reynolds sought to reign in expectations that advertising spending is set to rocket ahead, particularly with the auto industry still in deep turmoil.

"We're not looking for a 'V' kind of recovery. The rate of decline has certainly stopped... but that doesn't mean we're growing over last year," he said.

Shares of CBS closed at $8.06 on the New York Stock Exchange, but last traded down to $7.15 in the post-market. (Editing by Steve Orlofsky, Tiffany Wu and Ted Kerr)