UPDATE 2-CBS profit beats Wall St view, shares rise

* Adj Q2 share $0.08 versus Wall Street estimates $0.07

* Q2 revenue $3.01 bln versus Street view $3.03 bln

* CBS shares rise 8.4 pct (Adds CEO comment, byline, details on results)

By Paul Thomasch

NEW YORK, Aug 6 (Reuters) - CBS Corp (CBS.N) posted a steep drop in quarterly profit but beat Wall Street expectations, raising hopes the media company has weathered the worst of a depressed advertising market and sending shares up more than 8 percent.

CBS Chief Executive Les Moonves, whose company is home to the top rated TV broadcast network, echoed what other top media executives have said in recent days -- advertising has stabilized and spending may be coming back.

"The back half of the year will be considerably stronger than the first," Moonves said, noting "early signs of a recovery".

An advertising recovery would be welcome news for all media companies, with powerhouses Viacom IncVIAb.N, Time Warner (TWX.N), and Walt Disney Co (DIS.N) all posting results that were severely pressure by the pullback in spending by marketers.

CBS is particularly vulnerable to advertising, given its reliance on its TV network as well as radio, Internet and outdoor advertising businesses.

About 65 percent of its revenue comes from advertising.

But that should be an advantage once advertising recovers, particularly given the performance of the broadcast network. CBS finished the 2008-09 season with an 11 percent growth in its average overall nightly viewership. The other three major U.S. networks -- News Corp's (NWSA.O) Fox, Walt Disney Co's (DIS.N) ABC and General Electric Co's (GE.N) NBC -- all dropped viewers by between 3 percent and 13 percent.

NO ESCAPE

Still, CBS couldn't escape the advertising recession in the second quarter. Revenue fell 11 percent to $3.01 billion.

Revenue fell about 10 percent in its TV business, nearly 23 percent in radio, and more than 27 percent in outdoor. Only its web business posted higher revenue.

Reported earnings dropped to $15.4 million, or 2 cents a share, from $408.4 million, or 61 cents a share, in the period a year ago.

However, after adjustments, CBS earned 8 cents a share in the quarter, surpassing expectations that it would earn 7 cents a share, according to Reuters Estimates.

Moonves said that "the economic climate is still very difficult."

But he said one of the positive signs was the return of local advertisers, who moved very quickly late last year to cut advertising.

"Let me stress that they are not back at levels that we want them to be, but they are clearly on the rise," he said.

"Local businesses were the first to be hit by the recession and it appears that they are the first to come out of it as well. Other media companies without local assets like ours may not have seen this yet, but the change is noticeably here."

Investors betting on a recovery have jumped back into CBS stock, which dipped as low as $3.06 earlier this year. In the past month, shares have risen more than 35 percent, outperforming other media stocks and the broader S&P-500.

Shares ended Thursday down 32 cents at $8.54, but rose 8.4 percent in after-market trade.

(Reporting by Paul Thomasch; Editing Bernard Orr)