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Media Money
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The eye network's stellar ratings, which have been trouncing its rivals, didn't help CBS Corp.'s earnings. The ad-heavy media company suffered heavily from the decline in the ad markets, reporting a loss of 8 cents per share, a penny less than analysts expected, down from a profit in the year-earlier quarter. Revenue also fell just short of analyst projections, down from $3.7 billion to $3.2 billion.
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CNBC.com |
But Chairman Sumner Redstone and CEO Les Moonves are optimistic about the economy and CBS' fate. Redstone says he sees "clear signs" the economy is proving. Moonves says "we've seen the bottom of this downturn" and that the trends in the back-half of the year are "encouraging."
Still, this quarter was rough. CBS' local TV stations suffered the worst from the ad downturn. TV revenue declined 12 percent and TV operating income before depreciation and amortization (OBIDA) fell 49 percent. (OBIDA is a key profit measure for media companies).
The traditional ad businesses are hurting as well: radio profit fell 62 percent on a 29 percent drop in radio revenue and the outdoor advertising division posted a loss of $38 million on a 24 percent drop in revenue. And of course the oldest medium, its books division, posted a loss on lower sales. New media -- the digital division -- more than doubled its revenue but reported an $11.6 million loss.
So where's the upturn going to come from? Moonves reports that demand for last-minute ads (called the "scatter market") has increased "dramatically," and prices are up as well. That could bode well for the "Upfront" ad sales period coming up in just a few weeks.
The company is counting on a strong slate of TV syndication releases and cost reductions to give the company a boost in the next couple quarters. The company is counting on network TV to be the go-to place for big brands in this economy. But there's a lot of concern that advertisers will look for more targeting and focus, which means more interactive web ads, and less mass media.
Moonves' confidence about the balance of the year played out in the company's expanded and improved outlook. CBS [CBS
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] says 2009 OIBDA will come in between $1.73 billion and $1.93 billion, despite the fact that OBIDA in the first quarter fell 61 percent to $250 million.
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