Declining asset values trigger huge CBS losses
Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.
For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.
In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.
Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.
Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.
-- Meg James