Thursday, mass media company CBS Corp. (CBS, CBS.A ), posted a profit for the third quarter from a loss last year, reflecting increased growth in television revenues from higher license fees and affiliate revenues, as well as higher syndication sales.
Leslie Moonves, President and Chief Executive Officer CBS said," The operating environment for our businesses continues to improve and we are finishing the year with strong momentum. So far this year, each quarter has been better than the one before, with the third quarter showing significant improvement over the second, just as we expected."
For the third quarter, the New York-based company posted net earnings of $207.6 million or $0.30 per share, compared to a net loss of $12.46 billion or $18.58 per share in the year ago quarter.
Results for the third quarter included non-cash impairment charge of $23.1 million, related to the disposition of radio stations, offset by a settlement of $16.8 million related to the favorable resolution of certain disputes regarding a previously disposed business and a tax benefit of $41.8 million resulting from the settlement of federal and state income tax audits. Together, these items contributed $0.05 to earnings per share for the quarter.
On average, 21 analysts polled by Thomson Reuters expected the company to earn $0.22 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the sequentially preceding second quarter, the company's net earnings dropped to $15.4 million or $0.02 per share from $408.4 million or $0.61 per share in the year ago period. On an adjusted basis, net earnings were $57.4 million or $0.08 per share, compared to $330.1 million or $0.49 per share last year.
Revenues for the recent third quarter slid to $3.35 billion from $3.38 billion in the prior-year quarter, owing to lower advertising sales largely offset by higher syndication sales, yet topping analysts' consensus revenue estimate of $3.19 billion for the quarter.
Segment-wise, Television revenues for the quarter rose 9% to $2.27 billion from $2.08 billion, primarily due to higher television license fees and affiliate revenues partially offset by lower local advertising sales. Television license fees increased 36% due to higher domestic syndication sales in 2009, while advertising sales decreased 5% due to softness in the local advertising marketplace and lower political advertising sales.
Radio revenues for the quarter declined 19% year-over-year to $318.9 million, mainly due to continued weakness in the radio advertising marketplace.
Outdoor revenues for the quarter decreased 23% to $424.9 million from the year ago period, reflecting the soft worldwide advertising marketplace and the unfavorable impact of foreign exchange rate changes. In constant dollars, outdoor revenues decreased 19% from last year. Americas, comprising North and South America revenues for the quarter decreased 20%, and 18% in constant dollars to $280.3 million from last year and Europe and Asia revenues decreased 28%, or 21% in constant dollars to $144.6 million from the same quarter last year.
Interactive revenues for the quarter decreased 15% year-over-year to $121.3 million, reflecting weakness in the display advertising market. Publishing revenues increased 2% to $230.4 million from a year earlier, reflecting the timing of the release of titles.
For the preceding second quarter, the company's total revenues declined to $3.01 billion from $3.39 billion a year earlier.
Operating income before depreciation and amortization, or OIBDA, for the latest third quarter was $565.6 million, compared to a loss of $13.48 billion a year earlier.
Operating income for the quarter was $418.2 million, compared to an operating loss of $13.62 billion in the same quarter last year.
The company's free cash flow for the quarter was a net cash outflow of $23.6 million, compared to a net cash outflow of $38.1 million in the year ago quarter. Effective income tax rate for the quarter was 26.6%, compared to 9.7% in the prior year quarter. The tax provision for 2009 included a tax benefit of $41.8 million from the settlement of federal and state income tax audits.
For the nine-month period, net earnings were $167.7 million or $0.25 per share, compared to a net loss of $11.81 billion or $17.64 per share in the same period last year.
Revenues for nine months declined to $9.52 billion from $10.42 billion last year, reflecting lower advertising sales partially offset by higher affiliate revenues.
Going forward, CBS indicated having many reasons for optimism as it looks to 2010. The company said its audience has grown from last year, while premium cable business continues to enhance its profile and once again added subscribers during the quarter. On the local front, pacing continues rising steadily for TV, radio and outdoor, and the company expects that with its new streamlined cost structure, margins will improve significantly going forward as well.
Amongst others in the sector, New York-based media conglomerate Time Warner Inc. (TWX), today reported a 11% drop in profit for the third quarter, hurt by higher interest expense, notwithstanding a 4% growth in revenues. Quarterly earnings for the second-largest cable operator in the U.S., however, topped market projections, with top line also beating Street view.
CBS closed Thursday's trading at $12.79, up $0.89 or 7.48%, on a volume of 17.00 million shares on the NYSE. In after hours, the stock further gained $0.01 or 0.08%, trading at $12.80. In the past 52 weeks, the stock trended in a broad range of $3.06 - $14.04, with a three-month average volume of 12.99 million shares.
CBS-A closed Thursday's trading at $12.76, up $0.86 or 7.23%, on the NYSE.
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