CBS: Reruns Lead to Flat Revenues

But Moonves Cites Production Savings During Writers Strike

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NEW YORK ( -- As the media industry ponders its efficiencies in a shaky economy, one bigwig who's not panicking is Les Moonves. The president-CEO of CBS Corp. said in his fourth-quarter 2007 earnings call to investors this morning that the TV side of CBS has not seen a recession thus far.
Les Moonves
Les Moonves Credit: CBS

"Fortunately, the hardest-hit sectors like home building and real estate are not significant advertisers on our air," he said. "The scatter market remains very strong, and it's too early in the year to make a determination on the spending of any one category. We'll continue to watch trends, but please remember, in any difficult market, it is the leaders who are the must-buys for agencies and advertisers, and that certainly includes network TV and CBS."

Staying positive
As for lingering effects of the just-resolved writers strike, which eroded as much as 30% of prime-time ratings for the broadcast networks, Mr. Moonves remains positive about his network's prospects. Fourth-quarter ad revenue for the network was flat compared to the same time period in 2006, as a result of the large amount of reruns the network had to air during the writers strike.

There were some cost efficiencies that came out of the strike, however. CBS saved $75 million in production costs during the strike period, Mr. Moonves said, and the relative ratings strength of its rerun-heavy schedule saved it from any major losses. "Our dramas repeat really well, so we didn't have any cash going out," he said. "And yet we retained 70% of our audience or more, and so we were able to retain that cash."

Earlier in the call, Mr. Moonves also addressed the gray area that continues to surround the effectiveness of Nielsen's commercial ratings in the post-strike TV market. "With the new C3 measurement system, it is virtually impossible to draw apples-to-apples comparisons," he said. "And with the strike adding more repeats there is little conclusion that can be drawn from the numbers this season. What is important is that the advertisers are generally pleased that we have a more precise measuring system."

CBS will have new programs returning to air as early as March 17. Going into the upfront season, during which CBS will host its annual presentation at New York's Carnegie Hall on May 14, the network will bring back 11 shows from its current lineup but will pursue a more cost-efficient approach to the pilot season.

'Faster, leaner development model'
"We are programming the upcoming pilot season with an eye on building a faster, leaner development model with fewer sense of pilots and greater cost efficiencies across the board," Mr. Moonves said. And just as NBC CEO Jeff Zucker suggested that NBC's event this year will focus on the broader offerings in the NBC portfolio, Mr. Moonves also views the CBS upfront as a chance to "showcase the incredible power of all the terrific advertising platforms across the great CBS company."

Other properties the company may showcase at its May 14 upfront event include outdoor and radio. For the fourth quarter, CBS Outdoor revenue increased 7% to $619 million, bolstered by the growing digital-billboard network. In September, CBS purchased SignStorey, a digital out-of-home company that provides programming in retail and supermarket environments, for $71.5 million.

Conversely, CBS Radio dropped 7% on a same-station basis in the same time period. The radio division in particular has undergone a serious overhaul in the past 12 months, however, with a new CEO in Dan Mason as well as a new Chief Financial Officer in Anton Guitano, formerly of the CBS TV division, in addition to a programming overhaul and a major focus on monetizing digital radio. "Our radio division, from top to bottom, has an entirely new look and the efficiencies that we are seeing ... are extreme," Mr. Moonves said. "We have seen immediate, immediate numbers go up and ratings go up. And we think it's going to be monetized very, very soon."
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