CBS cuts dividend but profit beats estimates

NEW YORK (Reuters) - CBS Corp (CBS.N) sliced its longstanding dividend but reported higher-than-expected earnings as cost cuts offset the advertising downturn that has struck across its television, radio, and billboard businesses.

Shares of CBS rose 8 percent after the owner of the most-watched U.S. television network posted fourth-quarter profit of 34 cents per share, excluding impairment and restructuring charges. That surpassed the 25 cents average analyst expectation, according to Reuters Estimates.

Still, revenue fell to $3.53 billion from $3.76 billion a year ago, CBS said on Wednesday, short of the analysts' target of $3.58 billion, reflecting the damage caused by the severe advertising downturn.

Advertising accounts for about two-thirds of CBS revenue. Television revenue fell 8 percent, radio revenue fell 18 percent, and revenue from outdoor advertising fell 15 percent. The rest of its revenues comes from areas like cable fees and publishing.

Net profit tumbled to $136.1 million, or 20 cents per share, from $286.2 million, or 43 cents a share, in the period a year ago.

Amid investor concerns about falling profits, tight credit markets and $1.6 billion of debt due in July 2010, CBS cut its longstanding dividend to 5 cents per share from 27 cents.

Although other U.S. companies have reduced shareholder payouts as they struggled with the recession, CBS has steadfastly maintained the dividend was central to its strategy. As recently as last fall, Chief Executive Les Moonves promised investors a health and attractive dividend.

Since then, the media business has worsened, and many on Wall Street saw little option for CBS, other than cutting the payout.

"We have always been vigilant in maintaining our balance sheet in order to provide the strong financial flexibility that is more important than ever in these uncertain economic times," Moonves said in a statement on Wednesday.

"That's why we believe this is a prudent action to take while we await improvement in the economy and the credit markets," he added.

CBS shares rose to $5.56 in after-hours trading from their close on the New York Stock Exchange of $5.13, down 12 cents.

(Reporting by Paul Thomasch; editing by Jeffrey Benkoe)