CBS reports third-quarter profit; advertisers 'knocking down the doors,' Moonves says
CBS Corp., which owns the most-watched TV network, released earnings this afternoon that revealed glimmers of hope that the recession's grip on the advertising market finally might be easing.
Higher syndicated rerun sales of its television shows, including "Criminal Minds," "Medium" and "Ghost Whisperer," and an increase in TV ad revenue helped the broadcaster swing to a profit for the quarter that ended Sept. 30. CBS reported net income of $207.6 million compared with a loss of $12.46 billion in the third quarter of 2008, when the company wrote down the value of its TV and radio stations.
Revenue of $3.35 billion for the quarter was flat compared with the year-earlier period.
"There is no question that we are seeing strong evidence of a recovery right now," CBS Chief Executive Leslie Moonves said during a conference call with analysts Thursday afternoon. "Obviously nothing going forward is certain, and we must be mindful that the economy is still somewhat volatile."
Still, the CBS chief was bullish, saying he expects CBS' TV advertising revenue to grow this quarter and into 2010. During the third quarter, however, the company's radio and billboard division generated lower sales, further demonstrating that among media companies, local advertising has been hardest hit by the recession.
The heart of the company, the CBS television network, has gotten off to a solid start for the new fall prime-time season, and that has helped drive demand for commercial time, Moonves said. Last summer, when CBS sold the bulk of its commercial inventory for this season, the economy was weak, consumers were wary and advertisers were holding back spending. Consequently, CBS did not sell as much network advertising time in advance of the season as it has done in previous years.
But holding back commercial inventory several months ago is now paying off. The company is commanding dramatically higher prices -- about 25% more -- for its commercial time than it did just a few months ago, Moonves said during the conference call. There is so much demand for commercial time, he noted, that CBS is jettisoning promotional spots to make way for paying customers.
"They are knocking down the doors," Moonves said. "There is a great deal of demand for our spots. Some of the other networks are not in the same position. So we are a very good buy."
CBS' total audience has grown 1% this season; it has been averaging 12 million viewers a night in prime-time. Although CBS' prime-time audience is down 6% among ages18 to 49 -- the demographic most prized by advertisers -- two other networks have seen even steeper declines. ABC's 18- to 49-year-old audience has fallen 9% this season and NBC's is off 13%. Fox, which has had the strongest start of the broadcast networks, is up 16%.
-- Meg James
Photo of Leslie Moonves by Justin Sullivan / Getty Images