At Citigroup’s entertainment, media and telecoms conference CBS CEO Leslie Moonves ads his voice to others in media saying they haven’t seen any evidence of an economic downturn on local advertising. “As we look toward potential downturn in the economy–we haven’t seen any evidence of it, including in our local businesses. We have seen nothing that would lead us to believe we are in any kind of trouble,” he said.
News Corp. president Peter Chernin said basically the same thing yesterday.
During a presentation and then Q&A session with analysts, Moonves repeated his mantra: CBS Corp. is an under-valued stock throwing off big cash and paying a big dividend. He said the company will continue to use its cash to buy back stock and pay dividends, but it will also look for higher-growth Internet or emerging TV market acquisitions.
Moonves said he sees growth in all business units in 2008, led by TV, outdoor and publishing. Radio will grow, but not much, and Internet businesses will lead growth on a percentage basis.
Notes from the Q&A:
2:50 pm: Jason Bazinet: At what point will you use some of your cash to provide growth?
“We will continue to pay a dividend. As we look at our cash we ask are there better ways of using our cash than paying dividends?” Sold theme parks, sold radio. “We used chunk of money to buy internet assets–you will see us doing more of that.”
2:52 pm: When will the strike hit the bottom line for investors?
“We can finish this television season just fine. Obviously revenues will be down because ratings will be down. We have some live football games left, NCAA basketball, we have reality shows. Our revenues will be down somewhat but the cost of producing original content will be down more.”
2:54 pm: Moonves says CBS will not be paying refunds (make-goods) to advertisers for underdelivering on ratings. Ratings will be down in the spring due to the strike, but CBS will use existing commercial inventory to compensate advertisers.
2:57 pm: Moonves confirms analyst Jason Bazinet’s estimate of CBS’s take of political advertising in 2008: $250 million. Like Chernin yesterday, he said the unsettled field out of Iowa and New Hampshire mean spending will go through the roof as candidates pour political dollars into local TV and radio.
3:04 pm: Jason Bazinet and Moonves are finishing each other’s sentences. DVRs are great, the Internet “is the friend to commercial network television.” Network TV will survive the conversion to commercial ratings fine. Moonves points to Fox’s near $3 million fee for a Super Bowl ad as evidence of netowork TV’s strength.
3:05 pm: Question on CBS’s movie production strategy… producing films for Showtime and for theatrical release.
Nothing new here. The operation is set up but is halted by the writers strike. “We’ve just begun the development process and hopefully a year from now we’re in production.”
3:10 pm: Question from Kagan on increasing competitiveness of cable with network primetime:
“Showtime has had a phenomenal couple of years. We are taking ‘Dexter’ and putting it on the CBS network and running the entire first season. Part of this is strike-related. There will be crossover between cable and network; absolutely you willl be seeing more and more of that. The Showtime guys and the CBS guys are working closely together.”
3:13 pm: Question on growth drivers in 2009 when political advertising dries up?
“We are getting closer and closer to getting a major chunk of money for retransmission fees from cable operators. That goes directly to the bottom line of the local stations.”
3:14 pm: Moonves reveals only five folks have been hired to produce films at CBS. The business, talked about for more than a year now, is still in its infancy.
3:16 pm: Moonves talks about success of CSI trilogy in overseas syndication.
3:20 pm: Question: With regard to your pile of cash, do you see yourself increasing your buybacks and what kind of acquisitions are you looking at to grow the business?
“We have not decided what we’re doing with our dividend. Every day we talk about what we were going to do with our excess cash. We like high-growth businesses. We like content businesses because that’s our core. We would love to do an acquisition. We looked at ProSieben. We are looking seriously at some acquisitions.”
3:24 pm: Moonves is touting improvements in CBS’s radio business, a subject raised by Bazinet. He says management change at the top of CBS Radio has led to ratings increases in several markets, including New York City.
3:25 pm: talk wraps.
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