Rising Ad Revenue Propels CBS to Quarterly Profit

CBS Corp. on Friday reported an operating profit for the fourth quarter, contrasted with a loss a year ago, as its radio stations and the return of the National Football League on its No. 1 TV network boosted advertising revenue.

Earnings from continuing operations were $17 million, or 2 cents a share, in line with the average estimate of analysts polled by First Call Corp. A year ago, CBS posted a loss from continuing operations of $10 million, or 1 cent.

Revenue in the latest quarter rose 22% to $1.79 billion.

The company’s new chief executive, Mel Karmazin, has been driving ad growth at the radio and billboard business by cutting costs and persuading advertisers to spend more to reach the company’s broad audience.

Karmazin is looking for other ways to generate more value. He told analysts that he’s considering using CBS’ Internet assets to create a new publicly traded company.

Karmazin said the new company would be jointly owned by CBS and Infinity Broadcasting Corp., the No. 1 radio company. CBS owns about 83% of Infinity.

CBS’ results in the latest quarter exclude $7 million in severance payments to former Chairman and Chief Executive Michael Jordan, who stepped down in October--earlier than expected--after transforming the former Westinghouse into a pure media company. CBS also lost $7 million on sales of stakes in two cable networks.

Operating profit at the television division--the CBS network, television stations and cable channels--dropped 81%, despite a large boost in revenue. CBS blamed lower syndication revenue and smaller profit from programming other than the NFL, which the network regained this season after four years.

The expensive NFL contract of $500 million put a dent in results but has given reason for optimism at CBS, analysts say. The NFL helped attract younger viewers to the network, helping to put CBS back on the map with some advertisers who had shunned its older core audience.

Ratings among 18-to-49-year-old viewers are up 2.6% so far this season, as NBC and ABC both face declines.

The results come a day after Infinity reported an 11% increase in fourth-quarter earnings to $69 million, or 10 cents a share, a penny higher than estimates. Infinity’s revenue jumped 39% to $573 million.