Online Costs Negate CBS Revenue Gain

CBS Corp. on Tuesday reported big gains in revenue and operating profit for its first quarter but still posted a net loss because of $75 million in expenses related to developing its Internet operations.

CBS, which is being acquired by Viacom Inc., had a net loss of $38 million, or 5 cents a share, beating analyst expectations of a loss of 7 cents per share, as reported by First Call/Thomson Financial.

In the same period a year ago, CBS had net income of $387 million, which included a gain of $366 million from sales of various assets. Not counting that gain or other one-time items, CBS had income from continuing operations of $25 million, or 4 cents, a year ago.

Revenue jumped 36% to $2.40 billion from $1.77 billion.

CBS attributed the gains to advertising growth in its TV business, which includes the CBS network and 16 stations in major markets, as well as higher results in its Infinity subsidiary, a radio broadcasting and outside advertising company.

CBS said that its cash flow, or earnings before interest, taxes, depreciation, amortization and equity losses, jumped 85% to $517 million in the first quarter compared with $280 million in the same period a year ago. Cash flow is an indicator often examined by analysts to gauge the health of a company’s underlying businesses.

Shares in CBS were up $1.69 to $55.69 on the New York Stock Exchange.

CBS has stakes in a number of Internet companies, including CBS Marketwatch.com, and recently formed a separate division to pool those stakes under one management team.

That division had losses of $75 million associated with its Internet investments, which include IWon.com, a site that has been heavily promoted with cash giveaways. Without those losses, the company said it would have reported income from continuing operations of $35 million, an increase of 40% over last year’s first quarter.