Nov. 5, 2009 (PR Newswire) --
NEW YORK, Nov. 5 /PRNewswire-FirstCall/ -- CBS Corporation (NYSE: CBS.A and CBS) today reported results for the third quarter ended September 30, 2009.
"Through this extraordinary time, Leslie and his team have managed CBS not simply to survive but to truly thrive," said Sumner Redstone, Executive Chairman, CBS Corporation. "The strong performance of the CBS content businesses continues to build audiences, as well as our value proposition for advertisers. At the same time we've further solidified our financial position. I feel very good about what the future holds for CBS, especially given the improving economic outlook."
"The operating environment for our businesses continues to improve and we are finishing the year with strong momentum," said Leslie Moonves, President and Chief Executive Officer, CBS Corporation. "So far this year, each quarter has been better than the one before, with the third quarter showing significant improvement over the second, just as we expected. Going forward, we have many reasons for optimism as we look to 2010: In the new fall season, we are not only again the #1 television network, we have also grown our audience year-over-year. Our premium cable business continues to enhance its profile and once again added subscribers during the quarter. We've sold five series into domestic syndication this year, and global demand for our programming continues to grow. And on the local front, pacing continues rising steadily for TV, radio and outdoor, and we expect that with our new streamlined cost structure, margins will improve significantly going forward as well."
Moonves continued: "Over the long term, we continue to believe that great content is the best driver of growth in this industry, which is why we've been so focused on building our content businesses across the Company. To highlight this strategy, we are realigning our business segments beginning in the fourth quarter. Our aim is to offer greater transparency so others can continue to view CBS the way we do - as a collection of leading content businesses in all the right areas of distribution - and be better able to gauge our progress against our long-term goals going forward."
Third Quarter 2009 Results
Revenues for the third quarter of 2009 totaled $3.35 billion compared to $3.38 billion for the same prior-year quarter due to lower advertising sales largely offset by higher syndication sales.
Operating income before depreciation and amortization ("OIBDA") for the third quarter of 2009 was $565.6 million compared with a loss of $13.48 billion for last year's third quarter. Operating income was $418.2 million for the third quarter of 2009 versus an operating loss of $13.62 billion for the same quarter last year.
Results for the third quarter of 2009 included a pre-tax non-cash impairment charge of $31.7 million ($23.1 million, net of tax) and results for 2008 included pre-tax non-cash impairment charges of $14.12 billion ($12.69 billion, net of tax). Before impairment charges, third quarter 2009 OIBDA was $597.3 million and operating income was $449.9 million compared with OIBDA of $638.8 million and operating income of $499.1 million for the third quarter of 2008.
Net earnings for the third quarter of 2009 were $207.6 million versus a net loss of $12.46 billion for the same quarter last year and diluted earnings per share were $.30 in 2009 compared to a loss of $18.58 per diluted share in 2008. Before impairment charges, adjusted net earnings for the third quarter of 2008 were $265.9 million and adjusted diluted earnings per share were $.39.
Results for the third quarter of 2009 included three discrete items: the pre-tax non-cash impairment charge of $31.7 million ($23.1 million, net of tax), which was related to the disposition of radio stations, offset by a settlement of $28.0 million ($16.8 million, net of tax) related to the favorable resolution of certain disputes regarding a previously disposed business and a tax benefit of $41.8 million resulting from the settlement of federal and state income tax audits. Together, these items contributed $.05 to diluted earnings per share for the third quarter of 2009.
Free cash flow for the third quarter of 2009 was a net cash outflow of $23.6 million versus a net cash outflow of $38.1 million for the third quarter of 2008.
Nine Months 2009 Results
Revenues were $9.52 billion for the first nine months of 2009 versus $10.42 billion for the same prior-year period reflecting lower advertising sales partially offset by higher affiliate revenues.
OIBDA for the first nine months of 2009 was $1.20 billion versus a loss of $12.08 billion for the same prior-year period, and operating income was $767.9 million versus an operating loss of $12.46 billion for the same prior-year period. Before impairment charges, OIBDA was $1.23 billion and operating income was $799.6 million for the first nine months of 2009 compared with OIBDA of $2.04 billion and operating income of $1.66 billion for the same prior-year period.
Net earnings were $167.7 million, or $.25 per diluted share, for the first nine months of 2009 versus a net loss of $11.81 billion, or a loss of $17.64 per diluted share, for the same prior-year period. Before impairment charges and gain on dispositions, adjusted net earnings for the first nine months of 2008 were $840.3 million and adjusted diluted earnings per share were $1.25.
Free cash flow was $532.4 million for the first nine months of 2009 versus $1.36 billion for the same prior-year period.
Business Outlook
The Company continues to expect full year 2009 OIBDA to be in the range of $1.725 billion to $1.925 billion.
Consolidated and Segment Results
In the fourth quarter of 2009, the Company will realign its operating segments to more effectively highlight its long-term strategy of investing in content businesses and capitalizing on its strong local presence. The tables below present revenues, OIBDA and operating income (loss), under its previous segment structure as the Company did not operate under the new segment structure during the periods presented. The Company has included a comparison of this view with third quarter revenues and OIBDA under the new segment presentations on page 13 of this earnings release.
Reconciliations of all non-GAAP measures to reported results have been included at the end of this earnings release.
(Dollars in millions) Three Months Ended Nine Months Ended
September 30, September 30,
Revenues 2009 2008 2009 2008
-------- -------- -------- -------- --------
Television $2,269.0 $2,075.9 $6,447.1 $6,781.5
Radio 318.9 392.5 900.6 1,172.4
Outdoor 424.9 549.3 1,238.9 1,644.3
Interactive 121.3 142.3 381.3 235.4
Publishing 230.4 225.0 573.5 612.6
Eliminations (14.5) (9.3) (25.2) (22.7)
------------- --------- --------- --------- ---------
Total Revenues $3,350.0 $3,375.7 $9,516.2 $10,423.5
------------- --------- --------- --------- ---------
Three Months Ended Nine Months Ended
September 30, September 30,
OIBDA 2009 2008 2009 2008
-------- -------- -------- -------- --------
Television $483.9 $412.8 $1,019.3 $1,373.6
Radio 93.1 139.4 240.6 420.3
Outdoor 32.6 113.9 99.9 369.0
Interactive 4.1 3.7 18.0 (12.0)
Publishing 28.4 25.8 36.6 59.9
Corporate (34.8) (38.5) (98.0) (106.4)
Residual costs (7.9) (18.3) (79.8) (63.2)
Eliminations (2.1) - (2.1) -
------------- --------- --------- --------- ---------
OIBDA Before
Impairment Charges 597.3 638.8 1,234.5 2,041.2
------------- --------- --------- --------- ---------
Impairment Charges (31.7) (14,117.2) (31.7) (14,117.2)
------------- --------- --------- --------- ---------
Total OIBDA $565.6 $(13,478.4) $1,202.8 $(12,076.0)
------------- --------- --------- --------- ---------
Three Months Ended Nine Months Ended
September 30, September 30,
Operating Income (Loss) 2009 2008 2009 2008
-------- -------- -------- -------- --------
Television $440.6 $367.4 $889.7 $1,240.3
Radio 82.8 130.6 212.5 396.3
Outdoor (34.9) 51.8 (97.9) 188.3
Interactive (15.6) (14.0) (41.3) (38.0)
Publishing 26.6 23.4 30.6 52.6
Corporate (39.6) (41.8) (112.1) (116.0)
Residual costs (7.9) (18.3) (79.8) (63.2)
Eliminations (2.1) - (2.1) -
------------ --------- --------- --------- ---------
Operating Income Before
Impairment Charges 449.9 499.1 799.6 1,660.3
------------ --------- --------- --------- ---------
Impairment Charges (31.7) (14,117.2) (31.7) (14,117.2)
------------ --------- --------- --------- ---------
Total Operating
Income (Loss) $418.2 $(13,618.1) $767.9 $(12,456.9)
------------ --------- --------- --------- ---------
Television (CBS Television Network, CBS Television Stations, CBS Television Studios, CBS Studios International, CBS Television Distribution, CBS College Sports Network, CBS Films and Showtime Networks)
Television revenues for the third quarter of 2009 increased 9% to $2.27 billion from $2.08 billion for the same prior-year period primarily due to higher television license fees and affiliate revenues partially offset by lower local advertising sales. The following table presents revenues by type for the Television segment for the three months ended September 30, 2009 and 2008.
(Dollars in millions) Three Months Ended September 30,
% of % of
Television Revenues by Type 2009 Total 2008 Total
---------------------- -------- ----- -------- -----
Advertising sales $1,003.3 44% $1,061.1 51%
Television license fees 799.2 35 585.5 28
Affiliate revenues 335.1 15 300.6 14
Home entertainment 47.0 2 52.4 3
Other 84.4 4 76.3 4
----- ---- - ---- -
Total Television Revenues $2,269.0 100% $2,075.9 100%
---------------- -------- --- -------- ---
Television license fees increased 36% due to higher domestic syndication sales in 2009, which included the first cycle sales of Medium, Criminal Minds, Ghost Whisperer, Everybody Hates Chris and Numb3rs, compared to 2008, which included license fees for the domestic syndication sale of CSI: NY. Affiliate revenues increased 11% primarily due to growth in subscriptions and rate increases at Showtime Networks and CBS College Sports Network, and higher retransmission revenues. Advertising sales decreased 5% due to softness in the local advertising marketplace and lower political advertising sales.
Television OIBDA for the third quarter of 2009 increased 17% to $483.9 million from $412.8 million for the same prior-year period primarily due to higher profits from syndication sales and higher affiliate revenues partially offset by lower local advertising sales and higher television series costs reflecting the impact of the 2008 Writers Guild of America strike which reduced programming costs for the 2007/2008 broadcast season. Operating income for the third quarter of 2009 was $440.6 million versus an operating loss of $7.58 billion for the same prior-year period, which included an impairment charge of $7.94 billion to reduce the carrying value of goodwill and intangible assets.
Radio (CBS Radio)
Radio revenues for the third quarter of 2009 decreased 19% to $318.9 million from $392.5 million for the same prior-year period, primarily due to continued weakness in the radio advertising marketplace.
Radio OIBDA for the third quarter of 2009 decreased 33% to $93.1 million from $139.4 million for the same prior-year period as lower talent and employee-related costs resulting from restructuring and cost-savings initiatives were more than offset by lower advertising revenues. Operating income for the third quarter of 2009 was $51.1 million, which included an impairment charge of $31.7 million resulting from radio station divestitures, versus an operating loss of $3.19 billion for the same prior-year period, which included an impairment charge of $3.32 billion to reduce the carrying value of goodwill and intangible assets.
Outdoor (CBS Outdoor)
Outdoor revenues for the third quarter of 2009 decreased 23% to $424.9 million from $549.3 million for the same prior-year period, reflecting the soft worldwide advertising marketplace and the unfavorable impact of foreign exchange rate changes. In constant dollars, Outdoor revenues decreased 19% from the third quarter of 2008. Americas (comprising North and South America) revenues for the third quarter of 2009 decreased 20% (18% in constant dollars) to $280.3 million from $349.3 million for the same prior-year period and Europe and Asia revenues decreased 28% (21% in constant dollars) to $144.6 million from $200.0 million for the same quarter last year.
Outdoor OIBDA for the third quarter of 2009 decreased 71% to $32.6 million from $113.9 million for the same prior-year period principally driven by the advertising decline. Outdoor's franchise and lease costs are generally fixed in nature and with lower revenues, certain transit contracts are operating at their minimum guarantee levels, which significantly reduced OIBDA margins in the third quarter of 2009. For the third quarter of 2009, Outdoor reported an operating loss of $34.9 million versus an operating loss of $2.80 billion for the same prior-year period, which included an impairment charge of $2.86 billion to reduce the carrying value of goodwill and intangible assets.
Interactive (CBS Interactive)
Interactive revenues for the third quarter of 2009 decreased 15% to $121.3 million from $142.3 million for the same quarter last year, reflecting weakness in the display advertising market. Adjusted for divestitures and foreign exchange rate fluctuations, Interactive revenues decreased 13% from the third quarter of 2008.
Interactive OIBDA for the third quarter of 2009 increased 11% to $4.1 million from $3.7 million for the same prior-year period primarily due to lower employee-related costs partially offset by lower revenues. Interactive reported an operating loss of $15.6 million for the third quarter of 2009 versus an operating loss of $14.0 million for the same quarter last year resulting from depreciation and amortization expense associated with the CNET acquisition.
Publishing (Simon & Schuster)
Publishing revenues for the third quarter of 2009 increased 2% to $230.4 million from $225.0 million for the same prior-year period reflecting the timing of the release of titles. Best-selling titles in the third quarter of 2009 included Arguing with Idiots by Glenn Beck and Her Fearful Symmetry by Audrey Niffenegger. In constant dollars, Publishing revenues increased 4% over the same prior-year period.
Publishing OIBDA for the third quarter of 2009 increased 10% to $28.4 million from $25.8 million for the same quarter last year and operating income increased 14% to $26.6 million from $23.4 million for the same prior-year period primarily due to revenue growth, partially offset by higher write-offs of advances for author royalties.
Corporate
Corporate expenses before depreciation expense decreased to $34.8 million for the third quarter of 2009 from $38.5 million for the same prior-year period primarily reflecting the favorable impact from the termination of a real estate lease arrangement.
Residual Costs
Residual costs primarily include pension and postretirement benefits costs for benefit plans retained by the Company for previously divested businesses. Residual costs decreased to $7.9 million for the third quarter of 2009 from $18.3 million for the same quarter last year primarily due to a settlement of $28.0 million related to the favorable resolution of certain disputes regarding a previously disposed business partially offset by an increase in pension costs due to pension plan asset performance in 2008.
Interest Expense
Interest expense for the third quarter of 2009 was $135.4 million versus $134.8 million for the same prior-year period.
Interest Income
Interest income of $1.6 million for the third quarter of 2009 decreased from $6.4 million for the same quarter last year reflecting lower interest rates.
Other Items, Net
"Other items, net" for the third quarter of 2009 was $15.0 million principally reflecting foreign exchange gains. "Other items, net" for the third quarter of 2008 reflected a net loss of $41.3 million, which included a $56.4 million write-down of investments associated with other-than-temporary declines in the market value of the Company's investments.
Provision for Income Taxes
The Company's effective income tax rate for the third quarter of 2009 was 26.6% versus 9.7% for the third quarter of 2008. The tax provision for 2009 included a tax benefit of $41.8 million from the settlement of federal and state income tax audits.
