CBS Financial Results Better Than Expected; Writes Down TV, Radio Stations

Viacom and CBS may now be separate--but their respective advertising growth rates remain the same as when they were part of the same company.

A day after Viacom said its fourth-quarter 2005 advertising revenue had double-digit advertising growth, CBS said it posted a slight single-digit hike in advertising growth for the period. These results were at similar pacings when they were sister companies under the old Viacom Inc.

Viacom on Wednesday and CBS on Thursday issued their first separate earnings results since starting up as independent publicly traded companies at the start of the year. CBS's results were slightly better than analysts' expectations. Its fourth-quarter loss narrowed to $9.14 billion from $18.44 billion a year earlier.

Right off the bat, CBS looked to set the record straight concerning the value of its assets. Its results included a $9.5 billion write down in 2005 and an $18 billion write down in 2004 of its TV and radio stations.

That seemingly says a lot about where TV and radio assets are with Wall Street analysts these days. For a long time, analysts have evaluated CBS as the slower-growing media company next to Viacom.



"It's better to write them down now," said Dennis McAlpine, managing director of McAlpine Associates. "The street doesn't take offense at one time write off. But if it's in the [company] DNA, that's a problem. And remember this [value adjustment] is all on paper." McAlpine added the adjustment was timed well--a sort of clearing the deck for CBS's first earning report.

CBS said its TV advertising revenue rose 3 percent, with overall TV revenue (which includes license fees) up 2 percent to $3.83 billion from $3.75 billion in the fourth quarter of 2004. For the year, advertising revenues at CBS and UPN were up 4 percent--but 2 percent lower for the CBS stations group. Weak advertising results at the stations were somewhat expected, given that 2005 was up against a strong political advertising year in 2004. Outdoor advertising was one of the better-performing CBS divisions--up 4 percent for the year in revenue.

Radio revenue dipped 1 percent at CBS. But analysts say that's not bad when viewed against a 3 percent decline for the entire radio industry. New satellite radio technology and the Internet have also put pressure on traditional radio revenue.

Wall Street analysts expect tougher periods ahead--now that CBS radio star Howard Stern has moved over to Sirius Satellite Radio. Stern left CBS in December 2005.

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