The early read on CBS’ dismal earnings is that investors don’t believe any more than we do Les Moonves’ line that the ad market is improving.
The numbers were horrible: CBS saw its television revenues fall 12%; radio revenues slid 29% and outdoor advertising plummet 24%. Investors reacted swiftly and sheared almost 8% off CBS shares in after-hours trading. That hurts, especially after the stock had shown a little life in the last few weeks.
Moonves and his fellow media moguls are sticking to the same line about the ad market rebounding that the CIA had about Fidel Castro falling from power: “Any day now.”
Moonves even has publicly said the Tiffany network won’t cut its rates going into the upfront. “We will not reduce our pricing,” Moonves said at a industry conference in early March, according to a recent New York Post story.
Yet, how easy will it be to hold the line? Its cash-cow 10 p.m. shows – especially the CSI franchise – will be doing battle with Jay Leno beginning in the fall. Is Moonves’ boss Sumner Redstone reassured that after finally winning the ratings wars, CBS can’t cash in on the ad front. How much longer until NBC or ABC or Fox improves its slate and steals share of the shrinking network TV audience? Visions of that must warm Sumner’s heart.
One advertising agency chief we spoke to this week said going into the upfront ad buying season the thing he was expecting to see most from the nets was “flexibility”—meaning the ability to get out of long-term ad deals with less of a financial penalty – and not some land grab to buy time on CSI.
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