CBS Expects to Sell Some Radio Assets
By BRIAN STELTER
Published: August 1, 2008
The CBS Corporation reported a 1 percent increase in profit on Thursday and said it would sell 50 of its 140 radio stations as it shifts its asset mix toward Internet properties.
CBS, which relies heavily on advertising revenue from its CBS broadcast network and radio stations, said its local stations showed significant weakness amid a sluggish ad sales environment. Television, the company’s profit center, showed a 2 percent increase in revenue but a 12 percent decrease in operating income in the quarter that ended June 30.
“We’re clearly challenged by the economic conditions affecting many industries, particularly as it pertains to our local businesses,” Leslie Moonves, the chief executive of CBS, told analysts. He said CBS network advertising was performing more strongly than sales in local markets.
The radio division posted a 10 percent decline in revenue and a 12 percent decline in operating income from the same period last year. Mr. Moonves said the company intended to sell 50 midsize radio stations and focus on larger markets.
The company is in “very preliminary” conversations with potential buyers, Fred Reynolds, the chief financial officer for CBS, said. The company said it intended to finance a stock buyback with the proceeds from the sales.
CBS reported profits of $408.4 million, or 61 cents a share, up from $404 million, or 55 cents a share, in the same quarter last year. Revenue was also up 1 percent to $3.39 billion.
The company benefited from the sale of its stake in the Sundance Channel to Cablevision. Excluding that sale and other one-time expenses and charges, the company’s earnings fell to $355.3 million, or 53 cents a share, still surpassing Wall Street estimates of 52 cents a share, according to Thomson Financial.
CBS’s $1.8 billion purchase of CNet Networks closed on June 30. The company expects CNet to add at least 2 percentage points to its revenue and profit growth rates. The company will begin reporting the results of the CBS Interactive unit, including CNet, in September.
Mr. Moonves said sales teams were finding “extreme synergies” between the new CNet brands — including the technology site CNet, the business-oriented site BNet, and the television portal TV.com — and the existing CBS properties.