CBS pushes earnings up 26%

Despite sharply higher third-quarter profit at CBS Corp., investors fretted Thursday that a slowdown in TV advertising could crimp future earnings or that management might risk some of the company’s cash stockpile on big acquisitions.

Its shares fell 16 cents to $28.76 after the New York media company reported a 26% jump in earnings from continuing operations.

Chief Executive Leslie Moonves tried to allay concerns during a conference call with analysts and downplayed speculation that he was intent on using some of CBS’ $3 billion in cash to become a movie mogul.

“We have no plans to make any large acquisitions,” Moonves said. “That means we are not buying a movie studio.”

Instead, Moonves repeated his oft-stated position that CBS would consider smaller ventures such as Internet sites or other properties that would “tuck-in” to its existing businesses.

“We are happy with the hand that we’re dealt,” Moonves said.

Plus, he said, some of the cash will be used to buy back $1 billion to $1.5 billion worth of stock.

For the quarter that ended Sept. 30, CBS reported net income of $316.9 million, or 41 cents a share, a 55% drop compared with the third quarter of 2005, when CBS was part of conglomerate Viacom Inc. Analysts polled by Thomson Financial had projected earnings of 40 cents a share.

Last year, when theme parks were part of the company’s operations, net income was $708.5 million, or 90 cents a share.

Earnings from continuing operations -- after the split from Viacom -- climbed to $323.6 million from $256.9 million in last year’s third quarter.

Revenue rose slightly to $3.38 billion from $3.37 billion, just missing Wall Street’s expectations of $3.43 billion. Higher revenue from the company’s outdoor advertising and publishing businesses was offset by costs associated with the shutdown of the UPN television network. CBS also posted lower home entertainment revenue because CBS must pay for DVD distribution handled by Viacom.

CBS has sold 29 radio stations in eight markets for $570 million, contributing to its mountain of cash. In the second quarter, the company sold Paramount Parks for $1.2 billion.

Television revenue was flat for the third quarter, which was made up of the summer months when CBS was largely airing re-runs in prime time. Analysts estimated that ad revenue was down 2% for the flagship CBS network for the quarter. The company noted that it had a tough comparison because it lacked an event such as the prime-time Emmy Awards, which it aired in September 2005.

Nonetheless, Merrill Lynch media analyst Jessica Reif Cohen noted that CBS’ cash flow of $1.6 billion has already surpassed her full-year estimates.

“They’ve done an amazing job managing their assets and their balance sheet,” Reif Cohen said. “CBS was billed as the slow-growth company. Expectations were low, and they’ve under-promised and over-delivered.”

Anthony DiClemente, media analyst with Lehman Bros., agreed.

“CBS is a cash-flow machine,” he said. “People don’t seem to appreciate that.”

Also Thursday, Los Angeles-based Spanish-language media giant Univision Communications Inc. reported an 11% jump in third-quarter profit. The company said it earned $88.1 million, or 26 cents a share, on revenue of $536.1 million.

Univision shareholders agreed in September to be acquired by an investor group that includes Los Angeles billionaire Haim Saban, Providence Equity Partners, Thomas H. Lee Partners, Madison Dearborn Partners and Texas Pacific Group. The sale, which is awaiting approval from regulators, is expected to close early next year.

meg.james@latimes.com