CBS Corp. posts loss as ad slump slashes revenue

The anemic advertising market drained the profit from CBS Corp.

The broadcasting company, which owns the CBS network, television and radio stations and a bevy of billboards, on Thursday reported a first-quarter net loss of $55.3 million, or 8 cents a share. That compared with net income of $244.3 million, or 36 cents, for the same period last year.

“It should come as no surprise that our results reflect the economic downturn,� Leslie Moonves, chief executive of CBS, told analysts during an afternoon conference call.

CBS’ core businesses suffered as the recession chased away advertisers. The company’s revenue dropped 13% to $3.16 billion for the period. CBS’ results fell short of the expectations of analysts, who anticipated that CBS would generate $3.26 billion in revenue, according to Thomson Reuters.

In after-hours trading, CBS stock, which had perked up in recent weeks, lost ground. Shares ended the regular session at $8.06, up 8 cents, but after the closing bell, when CBS released its results, slid 59 cents to $7.47.

Moonves said he believed the worst might be over. He echoed the comments earlier this week by Walt Disney Co. Chief Executive Bob Iger and News Corp. Chairman Rupert Murdoch, who said they were detecting stabilization in the economy.

“We are seeing early signs of improvement in the advertising market both nationally and locally,� Moonves said. “It’s premature to call it a full recovery, but the trends are encouraging.�

CBS gave a more upbeat assessment for the remainder of the year.

Commercial sales have picked up during the last six weeks, a hopeful sign as the TV networks head into their all-important spring “upfront� selling season when they auction off the bulk of their ad time for the upcoming season. CBS is the only major broadcast network to improve its ratings this season, with a 7% increase in prime time.

Moonves hopes CBS’ gains will enable it to grab a bigger slice of the ad pie.

In addition, CBS will be able to bank profit from the sales of reruns of several TV dramas, including “Ghost Whisperer� and “Criminal Minds,� to cable networks. That guaranteed income is particularly welcome because, unlike more diversified media companies, CBS derives two-thirds of its revenue from advertising. That makes the company, controlled by billionaire Sumner Redstone, more vulnerable during a recession.

CBS’ television unit, which includes the CBS network, television stations, studio and the premium cable Showtime Networks, saw its revenue decline 12% to $2.23 billion for the first quarter. The company attributed the drop to the soft market and tough comparisons with a year earlier because the election season was heating up in the first quarter of 2008.

CBS Radio delivered more static as its revenue plummeted 29% to $259.7 million. The sale of radio stations in Denver contributed to the lower numbers.

Meanwhile, analysts were surprised by the weakness in outdoor advertising. Revenue was down 24% for the quarter to $379.9 million. The unit, which has a significant overseas presence, was dinged by a less favorable foreign exchange rate. It posted an operating loss of $38.2 million compared with operating income of $44.1 million for the same quarter last year.

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