CBS Records $9B Loss on TV, Radio Charges

[Dr. Jack]

Tough business


NEW YORK - CBS Corp. reported a loss of $9.1 billion in the fourth quarter on hefty charges to write down the value of its radio and television businesses, the media company reported Thursday.

CBS was reporting earnings for the first time as a separate company since its split with Viacom Inc. was completed at the beginning of the year. CBS reported the fourth quarter as if it were already a separate entity.

On that basis, CBS had a net loss amounting to $6 per share for the three months ended Dec. 31, weighed down by charges to write down the fair market value of its radio and television properties. The valuations of radio stations in particular have suffered in recent years due to stagnant revenues and higher costs.

The latest results compared to an even larger net loss of $18.4 billion, or $10.99 per share, in the comparable period in 2004, when the company also recorded big charges to write down its radio stations as well as its outdoor advertising business.

Revenues rose 2 percent to $3.83 billion from $3.75 billion a year earlier.

Excluding the charges, and assuming the split had occurred at the beginning of 2005, CBS said earnings would have been $311 million, or 41 cents per share. That was 2 cents a share ahead of the forecast of analysts surveyed by Thomson Financial.

CBS's shares fell 5 cents to $25.18 in early trading on the
New York Stock Exchange.

Also excluding the charges, CBS said that operating income rose 3 percent to $647 million, led by a 9 percent gain in its television business, 18 percent higher profits in outdoor advertising, offset by an 11 percent decline in earnings from radio.

CBS has been active in recent months, sealing a $325 million deal last November for a two-year-old college sports network called CSTV Networks Inc., even before its split with Viacom was formalized.

Last month it also raised its quarterly dividend from 14 cents to 16 cents, a jump of 14 percent. As it split from Viacom, CBS has said it intends to return capital to investors with dividends and other means, as its businesses generate significant amounts of cash. CBS also said it intended to sell its Paramount Parks business.

However, CBS chief Leslie Moonves indicated on a conference call with investors that it was unlikely that the company would make a run at the latest media company to go on the block, Spanish-language broadcaster Univision Communications Inc. Given CBS's already large footprint in radio and TV, Moonves said the regulatory hurdles to such a potential deal would be "extreme."

CBS is also working to shore up its radio business, which suffered another loss at the beginning of this year when the ultra-popular shock jock Howard Stern jumped to Sirius Satellite Radio Inc. Moonves acknowledged that its radio unit has had several "challenges" including the loss of Stern, but he said the business was turning around.