CBS profit drops as TV strike shakes up business

By Paul Thomasch

NEW YORK (Reuters) - CBS Corp reported a 15 percent drop in quarterly profit on Tuesday but declined to blame the economic slowdown or writers' strike, saying that three months of labor trouble actually may help business.

CBS instead attributed its profit decline to the sale of TV and radio stations and the loss of some outdoor advertising contracts. As for the economy, executives said they had yet to see a "recession in our day-to-day operations."

Chief Executive Les Moonves also said during a conference call with analysts that the strike against major TV and film studios resulted in a helpful shake-up in the way the television business is run, particularly when it comes to developing new shows.

"Many of the economic benefits we were able to achieve during the strike have changed the way we do business and will allow us to operate more efficiently going forward," Moonves said.

Among the changes caused by the strike, CBS signed half as many deals to develop TV shows as normal, commissioned far fewer pilots, and managed to cut overall production costs by $60 million or $75 million when the writers' union halted work.

Like other executives, Moonves said some of those changes may become permanent, such as cutting back on pilots, which are essentially test shows but can cost millions to put together.

"When I look back over the various shows I have been involved in that have been hits, it hasn't been the most expensive shows that have hit it out of the ballpark, and there's some feeling that you don't need to spend $5 million on a pilot to know whether you have a potential hit series," Moonves said.

He also said the media company would simply decline to sign as many development deals for potential TV shows.