CBS Cites Sale of Records Group as Profit Surges

CBS Inc. said Wednesday that its first-quarter earnings rocketed, but the rise resulted from a huge one-time profit on the sale of its Records Group and from interest earned by investing cash from other asset sales.

The company said the operating profit of its Broadcast Group fell 19%, compared to strong results a year ago.

CBS reported an after-tax profit of $911.3 million for the January-March period, compared to earnings of $48.7 million. Revenue fell 4.6% to $696.3 million from $729.7 million a year earlier.

The latest results included a one-time gain of $866.6 million mainly due to the sale of the CBS Records Group to Sony Corp., the Japanese electronics concern, for $2 billion.

Income from continuing operations surged to $44.7 million from $7.8 million a year earlier. But CBS said that was because it netted $51.7 million on interest income in the latest quarter, while it had interest expenses of $9.3 million in the same period in 1987. Its interest income was augmented by a pretax gain of $14 million on the sale of Treasury securities.

CBS has accumulated its cash by selling assets over the past 18 months that are not directly related to its core broadcasting business. It sold its book and music publishing units in late 1986 and its magazine division in 1987.

The CBS Broadcast Group made an operating profit of $15.6 million, down from $21.9 million, mainly because of lower results for the CBS television network, which has seen its prime time ratings slump to third place behind NBC and ABC for the first time.

The TV network’s results a year ago benefitted from the inclusion of broadcasts of college basketball’s and professional football’s championship games. Another network carried the Super Bowl football game this year and the CBS telecasts of the NCAA basketball finals occurred in the second quarter.

CBS said that net sales for the Broadcast Group, which were off 5% at $696.2 million, would have improved if the impact of the sporting events were excluded.

“Despite a difficult sales environment, Broadcast Group earnings met our budgeted expectations,” said Laurence A. Tisch, president and chief executive.