CBS takes hit in second quarter but says recovery is coming

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CBS Corp., the most advertising-dependent of all the major media conglomerates, said its second-quarter operating income fell 62%, but the company managed to squeeze out a small profit and said third-quarter advertising is stronger than it was a year ago.

‘The worst is behind us,’ CBS President and Chief Executive Leslie Moonves said on the company’s earnings call with analysts.

Moonves said CBS saw early signs of economic recovery with second-quarter revenue and profit better than in the first quarter. But revenue was still down at its major units including television, radio and outdoor advertising.

CBS’ television network said it was wrapping up the sale of advertising time for the fall TV season. ‘We have been able to achieve flat revenues for the percentage of inventory we’ve sold so far,’ Moonves said.

The company is holding back more advertising inventory to sell in the week-to-week, or ‘scatter,’ market, and Moonves said scatter pricing for the third quarter is up 30% compared with a year earlier. Among the advertisers starting to spend more are autos, pharmaceuticals and financial services categories, Moonves said.

CBS said it is not looking to make any major deals. ‘Now is not the right time to buy or sell,’ Moonves said, adding the company is ‘playing the hand’ it has been dealt.

For the quarter ended June 30, CBS posted operating income of $242.2 million, compared with $637 million a year earlier. Revenue was $3.01 billion, down 11%. The company had earnings of $15.4 million, down 96% from $408.4 million a year earlier.

CBS said sales at its television unit, which includes its CBS network, local television stations, production and distribution arms, and cable channels Showtime and College Sports Network, fell 10% to $1.95 billion because of less ad revenue and declining DVD sales of its television product.

Radio continues to be a sore spot for the company, with revenue falling 23% to $322 million, while sales at its outdoor division, which used to be a bright spot, fell 27% to $434.1 million. CBS said it will continue to look to unload smaller-market radio stations.

-- Joe Flint