CBS's Moonves 'Very Pleased' With How Advertisers View TV

Tells Analysts Scatter Market Remains Strong, Though TV Revenue Down 4%

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NEW YORK ( -- CBS Corp.'s second-quarter net income fell about 48% from the year-earlier period, which had been boosted by a gain on the sale of Paramount Parks. During a conference call after the results had been announced, CBS executives expressed confidence in the outlook for advertising at the company's flagship TV network.
CBS CEO Leslie Moonves: 'Very pleased'
CBS CEO Leslie Moonves: 'Very pleased' Credit: CBS

CBS said TV revenue fell 4% to about $2.2 billion in the period from about $42.3 billion from the year-ago quarter, when revenue fell about 1%. Meanwhile, radio revenue fell 11% to about $463.4 million from about $519.1 million, when revenue fell about 10%. The company's outdoor and publishing divisions saw revenue gains.

Strong scatter market
During an investor conference call, CBS CEO Leslie Moonves expressed optimism about TV advertising, noting that pricing for third-quarter scatter ad inventory, or ad time that is purchased closer to the time it runs on air, "continues to be very strong." Mr. Moonves said CBS and most other broadcast networks were able to secure "high-single digit" percentage increases for CPMs, or the cost of reaching 1,000 viewers, a common measure in TV-ad negotiations. CBS is "very pleased with how advertisers are now looking at network television," said Mr. Moonves.

But he also acknowledged that the venue is in the midst of great change, with ratings for commercials now gaining sway over commercials for programs.

So-called C3 ratings, which account for viewership of commercial breaks but also include viewers who watch TV ads as much as three days after they air with digital video recorders, are fast becoming standard, said Mr. Moonves.

The measure "is going to be very interesting. Obviously, the fact that 90% of people who use DVRs do it within the first three days, we are going to be getting the lion's share of those people. Those are the people that watch 60% more TV," Mr. Moonves told analysts. "The commercial ratings are going to be a lot more specific. They will be slightly down," although commercial ratings "favor broadcast TV" over other TV, he said.

Going private?
Also present on the call was CBS Executive Chairman Sumner Redstone. In response to a question from an analyst, Mr. Redstone said taking one of his holdings -- CBS and its sibling, Viacom -- private remained a possibility. "We think there's an enormous amount of growth in them without any great strategic change. However, we do consider all alternatives," Mr. Redstone said. While taking one of the companies private has been contemplated, he said "it's not on the front burner, but you can rest assured it will receive the consideration it should."

CBS said net income declined to $404 million, or 55 cents a share, compared with $781.7 million, or $1.02 a share, a year earlier.

Revenue fell 3% to $3.4 billion for the second quarter, compared with $3.5 billion in the year-earlier period. CBS said the decline reflected the absence of the UPN network, which ceased broadcasting in September 2006 and has since been merged with the now-defunct WB to form the CW network; the timing of the semifinals of the NCAA men's basketball tournament, which aired in the first quarter of 2007 compared with the second quarter of 2006; and the impact of radio and TV station divestitures.
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