CBS profit skyrockets in fourth quarter
A rebounding advertising market and politicians throwing money around in advance of the November elections helped CBS Corp. on Wednesday report fourth-quarter earnings that were more than quadruple its profit from the year-earlier period.
For the quarter ended Dec. 31, CBS recorded net income of $283 million, or 41 cents a share, up from $58.8 million, or 9 cents, in the fourth quarter of 2009, when the broadcasting company’s results were hobbled by a string of impairment charges.
Revenue jumped 11% to $3.9 billion.
“Every one of our businesses contributed to our best results of the year,” CBS Chief Executive Leslie Moonves said during a conference call with analysts. “The resurgence in local advertising was the story.”
CBS’ bottom line tends to be closely tied to the vicissitudes of the advertising market because, unlike rivals NBC, ABC and Fox, CBS doesn’t own an array of cable networks that can offset a downturn in corporate spending. The company was hard hit during the recent recession, when its advertising businesses suffered due to a pullback by sponsors.
However, once advertising spending picked up, coupled with a solid ratings performance for its prime-time lineup, CBS was in position to reap a bounty.
In addition to the political money, retailers, automobile makers and dealers and financial firms — which in recent years reduced spending levels — boosted their advertising buys.
TV station advertising rose 28% for the quarter, said CBS Chief Financial Officer Joseph Ianniello. Even CBS’ radio division, which in recent years has been a drag on the company’s earnings, posted 14% growth. Combined, local stations turned in 21% higher revenue at $821.5 million.
Companywide, ad revenue was up 12%.
“All of the advertising units were on a tear,” said analyst Laura Martin of Needham & Co. “CBS has demonstrated huge margin expansion, which shows that they have really profitable growth.”
Television license fee revenue increased 29%, driven by rerun syndication sales of “CSI: Crime Scene Investigation” and foreign sales of such CBS-produced shows as “Hawaii Five-0.”
“Every one of our new shows was profitable from Day 1 because of the international marketplace,” Moonves said.
Ad revenue at the flagship CBS network was up 8% and sales of excess commercial inventory for the current television season have been strong. That bodes well for next season as the television industry heads into the crucial spring selling season. Revenue for CBS’ entertainment division — which includes the broadcast network and television studio with its lucrative syndication income — was $2 billion, an increase of 11% from the fourth quarter of 2009.
Cable networks, primarily Showtime, saw revenues climb 6% to $368.3 million. The Simon & Schuster publishing house saw revenue climb 5% to $231.7 million, driven by the popularity of Glenn Beck’s “Broke” and “Full Dark, No Stars,” by Stephen King.
The company’s billboard division saw its revenue increase 6% to $511 million.
