CBS reported Q3 performance in line with it’s October 10 earnings warning. (Join us for LIVE coverage beginning at 8:30 a.m. ET; refresh this page for the latest)
Interactive revenues remained a small fraction of the company’s overall sales, increasing to $140.7 million from $35.9 million, due mainly to the CNET acquisition. Include CNET in last year’s results and revenues grew 6% on a 12% gain in display advertising.
CBS television revenues were $2.1 billion, up 2% over the prior year. Poor ad revenues dragged on higher television licence fees (thank you CSI: New York), home entertainment and affiliate revenues partially offset by lower advertising sales.
Radio revenues tanked, down 12% to $392.5 million from $445.7 million on divestitures and a weak ad market.
The company reiterated a cautious outlook amid a sharp downturn in local TV advertising which CBS expects to continue. CBS (CBS) said it expects full year operating income to decline mid-teens from the prior year.
CEO Les Moonves’s canned statement: “We are focused on taking the actions necessary to place our Company on an even stronger financial footing, continuing to reduce costs across the board and exercising a very disciplined approach to investment in capital projects.”
LIVE Confererence Call notes; refresh for the latest:
8:30 Good morning, we’re listening to The Who while we’re on hold.
8:35 Here’s investor-relations exec Adam Townsend with the legal disclaimers.
8:36 Here’s Sumner Redstone: “CBS is clearly operating in one of the most difficult environments in our recent memory.” Says he’s pleased CBS is continuing to pay an attractive dividend and is investing for growth.
8:40 Sumner brings up National Amusements (NAI). We’ve been “pulled into the wake of unforseen” circumstances. This triggered the sale of $233 million worth of Viacom and CBS shares. “This is not somehting NAI wanted to do. NAI has no intention of selling a single share of Viacom and CBS.”
8:41 Sumner says: Notwithstanding speculation in the press, NAI is having constructive talk with its lenders. I fully expect a fair deal will be reached in a reasonable timeframe.
8:42 Sumner hands the phone to CBS CEO Leslie Moonves, who immediately stresses the company will pay its attractive dividend. “The dividend is front and centre in our strategy.”
8:43 Says the content creators are “firing on all cylinders.”
8:44 Les describes CNET: “The greatest collection of profitilbe online brands in the industry.”
8:46 The CBS television network is back on top. For the first time in 20 years, they’re on top in “every single category” says Les.
8:46 Two and Half Men is the number one comedy? What’s wrong with this country?
8:47 Les sings Katie Couric’s praises.
8:49 Syndicating CSI: New York drove television licensing fees up 41%.
8:51 Interactive revenues were up four fold over a year ago. They profited $2.5 million, up from losing $11 million last year.
8:51 Two years ago, CBS Interactive ranked 100+ in Web traffic. Now it’s number 7.
8:53 Les says he expects fourth quarter results to reflect the margins of the medium’s potential.
8:53 Don’t look for any CBS Interactive acquisitions, even though companies are cheap right now, says Les. “Right now our focus is on operating our existing businesses.”
9:00 We’re going over the numbers. Go to the release if you want them in detail.
9:00 The focus: free cash flow and an attractive dividend.
9:02 Hurricanes and presidential debates took up valuable ad time, so CBS doesn’t want you to compare this quarter too closely to the same one a year ago.
9:06 CNET networks ad revenues are up 14% over last year.
9:09 Now we’re on to the Q&A.
9:09 Cohen from Merrill Lynch wants to know if Showtime will keep showing movies. Yes, Les says, but the focus is on original content. Also he says, scatter pricing is in there.
9:11 Sanford Bernstein analyst asks: Is the dividend strategy tied to EPS? Answer: It’s tied to earnings and free cash flow.
9:14 Strip out the presidential debates and the hurricane and TV ads are “down mid-single digits to lower than that.”
9:16 Sold high 70s at the upfront. Cancellations are normal amount. We have not aseen a great slowdown in national advertising. Our major categories are still hanging in there quite a bit. We do not have that fear of falling off the cliff. I can’t imagine the auto category getting much worse than it is right now.
9:18 Toyota, Honda, and Mercedes are picking up spending. Toyota is bigger than GM.
9:21 Financial services are actually picking up a bit, because people are changing their messages.
9:26 Les: “The Obama purchase last night did a very good job for us economically.”
9:29 New post up: Moonves: National Ad Spending “Still Hanging In There” (CBS)
9:29 Analyst asks will the disparity between local and national continue to expand?
9:31 Les: Big tent advertising, advertisers realise they cannot do without. Advertisers have pulled back on the spending and are going where they get their biggest pop for their dollar: broadcast TV.