CBS quarterly earnings drop
NEW YORK (Reuters) - CBS Corp (CBS.N) on Tuesday said quarterly net earnings fell 48 percent from a year ago, when it was helped by a tax benefit and the sale of its Paramount Parks, while revenue suffered at both its radio and television divisions.
CBS, which runs the most-watched U.S. television network, reported second-quarter net earnings of $404 million, or 55 cents a share, compared with $781.7 million, or $1.02, a year earlier.
Year-ago earnings included income from discontinued operations of $291.9 million, reflecting a gain on the sale of its Paramount Parks. It also had a tax benefit.
On an adjusted basis, earnings in the latest quarter rose to 54 cents from 47 cents per share, surpassing the average analyst estimate of 51 cents per share, according to Reuters Estimates.
But CBS revenue fell 3 percent to $3.4 billion, as weak radio results offset strength in its publishing and outdoor advertising divisions. Its stock was down about 2 percent in New York Stock Exchange trade amid mixed reactions from analysts.
"Results were generally in line with expectations, reinforcing the anemic growth trends in CBS' radio and TV ad businesses resulting in subpar normalized revenue growth," Goldman Sachs analyst Anthony Noto said in a note to clients.
Goldman Sachs has a "sell" rating on the stock, which has climbed about 4 percent this year while the company has been steadily buying back its own shares.
Deutsche Bank, however, described the quarter as "another solid performance" by CBS and kept its "buy" rating on the stock.
"Overall, CBS continues to navigate a tough 2007 and appears poised for a better 2008 with political (advertising) kicking in, while continuing to return capital to shareholders," Deutsche Bank analyst Doug Mitchelson said in a research note.
Merrill Lynch also maintained a "buy" rating on the stock after the earnings release.
BIG SALES OF "SECRET"
CBS' radio division, which made headlines this year when it dropped talk show host Don Imus because of controversial remarks he made in reference to a women's college basketball team, particularly suffered from a weak advertising market.
At the same time, CBS is changing its format in some markets and divesting stations.
Revenue from that division fell 11 percent to $463.4 million and would have dropped 5 percent excluding its divestitures.
At CBS television, home to hit shows like "CSI," revenue fell 4 percent to $2.2 billion, partly because the popular NCAA basketball tournament, which it broadcasts, aired during the first quarter in 2007 versus the second quarter in 2006.
TV operating income before depreciation and amortization, a key measure of media industry profitability, increased 3 percent.
Outdoor advertising revenue, which includes outlets like billboards, rose 4 percent.
Publishing at its Simon & Schuster unit was particularly strong, with revenue up by 14 percent as titles like "The Secret" sold briskly.
Reiterating its outlook for the rest of the year, CBS said revenue and operating income in 2007 will be comparable to that of 2006. Longer term, it said it is still poised to post low single-digit percentage growth in revenue, mid single-digit growth in operating income and high single-digit growth in earnings per share.
Shares of CBS, which split from Viacom in January 2006, were down 71 cents, or 2.2 percent, at $32.06.
