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CBS’ third-quarter profit boosted by billboard spinoff

CBS Corp., led by Chief Executive Leslie Moonves, above, grew third-quarter revenue by 2% to $3.4 billion during the third quarter.
CBS Corp., led by Chief Executive Leslie Moonves, above, grew third-quarter revenue by 2% to $3.4 billion during the third quarter.
(Julie Jacobson / Associated Press)

CBS Corp. didn’t need a billboard to tell Wall Street that it was weathering a downturn in the advertising market.

The New York broadcasting giant increased third-quarter revenue by 2% to $3.4 billion, which was slightly ahead of analysts’ expectations.

“We are still the best game in town,” CBS Chief Executive Leslie Moonves told analysts on a Wednesday conference call.

Earnings for the July-September period were largely shaped by the company’s spinoff of its billboard business, formerly known as CBS Outdoor.

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That divestiture in July boosted quarterly profit to $1.64 billion, or $3.03 a share, up from $494 million, or 80 cents a share, in the year-earlier period. The spinoff resulted in a $1.56-billion gain for the media company.

Excluding restructuring charges, the divestiture and a $52-million write-down for a TV station swap with another company, earnings came in at 74 cents a share. Analysts had predicted 73 cents a share from continuing operations.

Net earnings from continuing operations dropped nearly 28% to $952 million for the quarter.

Higher programming costs, including CBS’ pricey contract for NFL football on Thursday night, and unfavorable foreign exchange rates put a drag on profit. CBS paid more than $275 million for the rights to eight prime-time football games, and much of that was recorded during the third quarter.

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However, CBS was able to use “Thursday Night Football” to demand husky advertising rates on the broadcast network.

“The NFL football has clearly been a great addition to our prime-time lineup,” Moonves said.

CBS, however, was disappointed that many of the contests were blow-outs, with less-than-stellar ratings. On the bright side, the NFL gambit allowed CBS to move other shows around the prime-time schedule and launch new programs.

Advertising revenue was up 2% companywide. Political spending in advance of this week’s elections also helped generate revenue to CBS’ TV and radio station group, with more campaign dollars expected during the current quarter.

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CBS Entertainment, which includes the flagship CBS broadcast network, produced 1% higher revenue at $1.9 billion. Operating income declined 22% to $335 million, again weighed down by the NFL football deal.

Cable networks, including Showtime, increased revenue 5% to $624 million, largely attributed to higher licensing fees for syndication sales of Showtime original shows. Cable operating income was up 4% to $272 million.

Simon & Schuster book publishing revenue declined 11% to $199 million. Operating income of $43 million was about flat compared with the year-ago period.

Local broadcasting revenue rose 6% to $680 million, with politicians buying plenty of airtime on CBS TV and radio stations. TV station revenue was up 10% while radio airtime sales perked up 2%.

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Operating income for the stations increased 18% to $214 million.

CBS earnings closed up 51 cents to $52.50 a share. The company, controlled by billionaire Sumner Redstone, released its earnings after the markets closed, and shares continued to gain ground in after-hours trading.

Twitter: @MegJamesLAT

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