CBS Declares 5-Cent Dividend

Fitch differs with S&P and confirms credit rating
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NEW YORK: CBS Corp. said it would pay a dividend of five cents this week. The CBS (NYSE: CBS) board approved the measure yesterday, to be payable on the company’s common stock on July 1, for shareholders of record as of June 10.

The Eye Network parent company was put on downgrade watch this week by ratings service Standard & Poor’s, on fears that the continued slump in media ad sales would bring the company above S&P’s leverage threshold. Around two-thirds of the media company’s revenues are from advertising.

S&P has CBS’s long-term debt at BBB, as does Fitch, an S&P competitor that affirmed its rating this week. Fitch called the outlook for CBS “stable,” and said the media conglomerate could handle its debt payments due next year even with diminished earnings.

“Fitch believes EBITDA declines will be in the 20 to 30 percent range in 2009, resulting in gross leverage above 3x,” the firm said in a release. “As such, the ‘BBB’ rating with a stable outlook is expected to be weakly positioned in the category while CBS endures the very dramatic and potentially protracted advertising downturn.”

However, Fitch said it believes CBS can handle its maturities during the decline.

“In addition, on the other side of this extended downturn, Fitch believes CBS could face fewer competitors in its local markets, will have a lower fixed cost structure, will face a manageable debt maturity schedule and will carry a lighter absolute debt load with greater liquidity,” the release read.

CBS moved up slightly in the day’s trading on news of the dividend, from closing at around $5 yesterday to a high of $5.65 today. -- Deborah D. McAdams