CBS slashes dividend by more than 80%; net income plunges on weaker ad sales
CBS Corp., seeking to stave off a cash crunch and a downgrade its credit rating, slashed its dividend by more than 80% to 5 cents a share from 27 cents.
The broadcasting giant, releasing fourth-quarter results after the market closed, said net income plunged 52% to $136.1 million from $286.2 million in a year earlier.
Revenue was down a more modest 6% to $3.5 billion for the quarter compared with nearly $3.76 billion for the same period in 2007. The company attributed the lower top line to advertising weakness, partially offset by higher affiliate revenue from Internet media company CNet.
The dividend cut was even larger than Wall Street analysts had been expecting.
Chief Executive Leslie Moonves explained the reduction by pointing out that CBS had long been generous with its cash to investors but the economy now required the company to adjust its policy.
"CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company," Moonves said. "However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”
Said CBS Executive Chairman Sumner Redstone, “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come."
Moonves, in a conference call with analysts, declined to give much guidance on the current first and upcoming second quarters. But he said he expected the second half of the year to be stronger for the company because CBS will have rerun revenue from the syndication of five TV shows "hitting the books" this fall.
-- Meg James