CBS: Steep Hits Cross-Platform, Moonves Anticipates Future Uptick

Les Moonves of CBSCBS Corp. says its upfront TV ad sales deals are almost completed -- with slight price declines and lower revenue than a year ago. "We are nearing the finish line of our upfront discussions," says Les Moonves, president and CEO of CBS Corp., during an analysts call for the company's second-quarter results.

"The good news for us -- despite slight price declines, our viewership is up. Total volume will be down this year [for the upfront]," added Moonves, although he did not offer details.

Like other major TV networks, CBS will retain more inventory for the scatter market, he noted, but Moonves said it isn't all bad. CBS made a similar decision in 2002, with good results.

"We ended up making more money in scatter than [selling that inventory] in the upfront," he said. Last year, CBS sold around 75% to 80% of its TV inventory in the upfront. Moonves expects CBS to sell around "10 points less" -- around 65% or so, he said.

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CBS' overall second-quarter financial results were reflective of a weak economy and a continued weakening business segment: Steep drops in revenue and income across virtually all segments.

"The economic climate is still very difficult," says Moonves in an earnings call. Moonves did say the second quarter was better than the first, and that the third quarter appears to be better than the second. Overall, Moonves says CBS businesses have been improving since the first quarter.

"Sales pacings in our local business have been getting stronger," says Moonves. "Let me stress -- they are not at the levels they were." Still, those businesses are better than earlier in the year, he says.

For the third-quarter network TV scatter market, CBS says volume is up over 30%, or about $30 million more than third-quarter 2008. Still, overall scatter pricing -- cost per thousand viewers [CPMs] -- is weaker than a year ago.

"Advertisers have been coming back," says Moonves. He says this includes pharmaceutical companies, fast food, telecoms and financial services. Another positive: "We have zero makegoods."

Television advertising declined 13% to $1.15 billion during the second quarter -- much of this due to softness of advertising at the CBS television station group. TV revenues also fell to $1.9 billion from $2.1 billion in the prior year period.

CBS noted that affiliate revenues for its television businesses -- which includes Showtime Networks cable fees, as well as retransmission revenues for its stations -- were 10% higher to $328.8 million.

CBS' net earnings fell to a scant $15.4 million from a $408.4 million gain from second-quarter 2008. Revenues were down 12% to $3.0 billion from $3.4 billion.

For the period, other CBS businesses are not where they were a year ago. Radio revenues declined 23% to $322 million; outdoor revenues were down 27% to $434 million. Publishing revenues -- the Simon & Schuster division -- dropped 2% to $181.4 million.

The one bright spot is CBS Interactive, with revenues almost tripling to $126.4 million from $40.2 million.

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