CBS Tops Zacks Estimate

• By Zacks Equity Research
• On 6:28 pm EST, Friday November 6, 2009

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Symbol	Price	Change
CBS	13.17	-0.38

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CBS Corporation (NYSE: CBS - News) recently reported better-than-expected third-quarter 2009 results. The quarterly earnings of 25 cents a share surpassed the Zacks Consensus Estimate of 22 cents, but fell 35.9% from 39 cents posted in the prior-year quarter.

On a reported basis, including one-time items, quarterly earnings of 30 cents a share improved from quarterly loss of $18.58 delivered in the year-ago quarter.

The sequential rise in revenue and the cost containment drove the earnings growth. Total revenue climbed 11.4% sequentially to $3,350 million in the quarter, but tumbled 0.8% year-over-year. However, the rate of year-over-year decline sharply decelerated from 11% and 14% experienced in the second and the first quarters of fiscal year 2009, respectively.

By segments, television revenue jumped 9.3% to $2,269 million, driven by a rise in television license fees (up 36%) and affiliate revenue (up 11%), partly offset by softness in local advertising revenue (down 5%). Publishing revenue climbed 2.4% to $230.4 million.

The radio division's revenue dipped 18.8% to $318.9 million due to a slump in advertising demand. Revenue in the Outdoor segment also dropped 22.6% to $424.9 million due to sluggishness in advertising and an adverse impact of foreign currency translation. In constant dollars, outdoor sales slipped 19%. Interactive segment revenue slipped 14.8% to $121.3 million due to softness in display advertising market.

CBS notified that it is realigning its reporting segments. From fourth-quarter 2009, it will report under two groups – Content Group comprising Entertainment (television – network, studios and distribution, and films and interactive), Cable Networks, and Publishing, and another Local Group, comprising Local Broadcasting and Outdoor.

The media conglomerate CBS re-affirmed that its fiscal year 2009 operating income before depreciation and amortization (OIBDA) will be within the range of $1.725 billion to $1.925 billion. OIBDA for the quarter slipped 6.5% to $597.3 million.

During the quarter, CBS generated negative free cash flow of $23.6 million, compared to negative free cash flow of $38.1 million in the prior-year quarter. It had cash and cash equivalents of $473.8 million at the end of the quarter with total long-term debt of $6,986.4 million, representing a debt-to-capitalization ratio of 44.1%. CBS also secured a new three-year revolving credit facility of $2 billion, replacing the previous, undrawn facility that was slated to expire in December 2010.

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