CBS Television Makes More, Retains Less in 3Q

The TV operations at CBS (NYSE: CBS) pulled in $2.08 billion in the third quarter, a 2 percent increase over the same period last year. Operating income, however, was down 17 percent to $368.6 million. TV segment revenue was driven in part by a 41 percent increase in license fees, particularly cable syndication of CSI: New York. Increased expenses and lower margins on syndication hit CBS’s operating income. Overall, the New York media company reported revenues of $3.38 billion for 3Q, up 3 percent from the same prior-year period, attributed to syndie growth and the acquisition of CNET Networks. Operating income was $538.8 million, down around 20 percent from last year. The results do not reflect a $14 billion impairment charge CBS took in early October. Factoring in the charge, operating income for the company was a loss of $13.62 billion; net earnings were a loss of $12.5 billion or $18.58 per share. Wachovia analyst Marci Ryvicker said CBS was in line with expectations, and that the network was doing better than expected. “The network business in general has taken a lot of heat in the past few years given the DVR explosion and increased competition,” Ryvicker wrote in a research update. “CBS is holding its own--ranked as the No. 1 network among all demographics (first time in 20 years) for the first five weeks of the season, and has experienced fewer upfront cancellations and make-goods. While the scatter market is not booming, pricing is still above upfront levels and CBS is taking share.” CBS was trading at just under $9.48 Halloween morning. Wachovia gave it a $10 to $12 valuation.