$2.3 billion TV revenue
TV revenue fell by 1% to $2.3 billion compared with the year-previous quarter. The company's TV segment includes a broad range of properties, including the CBS and UPN broadcast networks, TV stations group, pay-TV operations as well as TV production and syndication. CBS attributed the revenue drop was lower DVD sales of its popular programs.
Operating income at the TV unit also fell 3% to $491.9 million, reflecting the $24 million cost of closing the wholly owned UPN network. CBS is rolling UPN into a joint venture with Time Warner called the CW, which also incorporates the WB.
Net earnings up
Overall, CBS Corp. reported a decline in revenue, down 1% to $3.48 billion on the previous year's period. Net earnings were $781.7 million, or $1.02 per share, compared with $753.8 million, or 94 cents per share for the second-quarter 2005.
On a conference call with analysts this morning, CBS Corp. CEO Leslie Moonves denied that the TV upfront had been "anemic," saying the upfront had been positive for CBS, which had taken in more ad volume and executed some cross-platform deals. CBS took in $2.4 billion in ad sales during the upfront, slightly down on last year, when the network said it had reeled in $2.5 billion to $2.6 billion in upfront commitments.
When asked about the size of potential digital revenue in future years, Mr. Moonves said, "It's going to grow more than 100% in 2006 from 2005. ... In terms of giving a specific number, it is very hard because these initiatives are coming in every single day. It will be in the hundreds of millions of dollars, though." He said CBS Sportsline.com was a major point of focus for the company.
Mr. Moonves also outlined an expected increase in political revenue for the TV stations group as the November midterm elections approach. "Everywhere but New York spending is exceeding our expectations," he told analysts this morning. The stations group turned in a 5% increase in revenue during the quarter.
Radio revenue was down 8% this quarter compared to last year, to $519.1 million from $566.5 million, due to weak radio advertising. CBS is hoping to focus more on higher-growth markets and is likely to sell radio stations in 10 smaller markets. More than 100 staff positions were axed this quarter as CBS Radio attempted to reduce its cost structure. Radio sales were hurt by the departure of Howard Stern to Sirius Satellite Radio in January.
While CBS Radio replaced the ratings-beleaguered David Lee Roth (who in turn replaced Mr. Stern) with the "Opie & Anthony" show in Boston, New York and Philadelphia and other markets in April, the ratings lift wasn't apparent until after the second quarter ended because of the lag time in getting radio ratings. (Unlike TV, radio is measured with a paper diary system, which takes longer to process.)
Outdoor posts growth
Arbitron's spring 2006 book came out in July and indicated "Opie & Anthony" helped the stations' morning-drive audience by 50% to 75% over the winter ratings book, depending on which adult demos were compared.
A bright spot for the company, reporting its second quarter of results since splitting from Viacom in January, was CBS Outdoor, with revenue increasing 7% to $534.4 million from $499.3 million.
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Abbey Klaassen contributed to this report.