• by Wayne Friedman , February 27, 2008

Is the economy in a recession? Not on broadcast TV--and especially not on CBS.

During its fourth-quarter 2007 earnings call on Tuesday, Les Moonves, chief executive of CBS Corp., noted that CBS is "not seeing a recession in our day-to-day operations."

He added: "The scatter market remains very strong, and it's too early in the year to make a determination on the spending on any one category." He noted that two difficult areas of the economy--home building and real estate--had little effect on CBS, since they are not big TV advertisers.

In tough economic times, Moonves said, marketers go to the media leaders--which remain network television and CBS. Moonves also said the three-month-long writers' strike had no impact on CBS' business.

In fact, he added, CBS benefited financially by canceling many TV development deals as a result of the strike. CBS said it probably saved around $60 million to $75 million in working capital. Overall, each broadcast network typically spends $100 million to $150 million a year in programming development costs.

"There are going to be a lot less pilots. We'll not get up the number we had before. There will be a great deal of cost reductions," said Moonves.

For the fourth quarter, CBS' operating income climbed 3% to $705 million, and for the entire year, operating income was up 1% to $2.6 billion. But net earnings from continuing operations were down 10% to $366.7 million because the company moved into a higher-income tax rate of 35.3% for 2007 versus 28.6% for 2006. Also, CBS's earnings from television fell 6% on a 4% decline in revenues.

Quarterly revenues slipped a bit, too: a 3% decline to $3.76 billion in the fourth quarter of 2007, due to sales of television and radio station sales, the non-renewal of several marginally profitable outdoor transit contracts and lower political advertising sales versus the fourth quarter of 2006.

Moonves says Internet advertising sales for its upcoming NCAA basketball tournament in March are projected at $21 million--more than double its revenue take of $10 million a year ago. Since CBS' programming cost remains the same, that $21 million "will drop to the bottom line."

CBS said it made 20 carriage deals with cable operators so far--with more to come. Political ad dollars are also expected to be higher--and this will benefit CBS because of its TV and radio outlets, especially in California.

CBS Radio continues to suffer, losing some 21% of operating income to $159.6 million in the period. Revenues during the fourth quarter were off 10% to $447.1 million. Moonves says a new executive team at the radio division should yield some positive results soon.

CBS said its outdoor media segment continues to grow in 2007, with operating income climbing 29% to $142.8 million during the period.