• by Wayne Friedman , November 3, 2006

CBS Corp. took it on the chin in its third-quarter earnings results due to weaker ad revenues at its radio stations and TV divisions. It pulled down CBS' net profit to $316.9 million, or 41 cents per share--down from $708.5 million, or 90 cents per share, a year earlier, when it was a part of Viacom.

Revenue barely rose to $3.38 billion from $3.37 billion. Some analysts had been disappointed in these results, considering that CBS had a couple of quarters of strong revenue periods earlier in the year.

Wall Street expected much of this: a net profit of 40 cents per share, and revenue of $3.4 billion.

The best news for CBS was the continued improvement in growth from its outdoor ad business. Outdoor advertising rose 9% to $536.2 million, with 9% improvements coming from North America and 6% gains coming from Europe.

TV revenue fell to $2.2 billion as a result of lower advertising and DVD revenue. DVD revenue fell 35% since the company stopped distributing its own videos. TV operating income before depreciation and amortization (OIBDA), a key measure of media industry profitability, rose 9%. This was a result of lower programming expenses.

Radio sales fell 6% to $508.1 million, in part because of lower ad revenue from the departure of Howard Stern to Sirius Satellite Radio at the start of the year. CBS also overhauled programming at 27 of its stations and faced a weaker ad environment, and it sold off some smaller market stations. Radio operating income fell 10%.

CBS has always been viewed as a slow-growth media company. Yet, since the beginning of the year, the company has made a series of acquisitions, as well as starting up a number of Internet programming initiatives.

Concerning future Internet revenues, Les Moonves, CEO of CBS Corp., told analysts during the earnings call that the Internet is expected to generate "hundreds of millions" in revenue next year. In reference to future Internet business, he said: "We don't want to buy YouTube, but we want to buy the next YouTube."

As for Katie Couric's new reign as the anchor of "The CBS Evening News," Moonves said the numbers have come down since her debut, but CBS is generating many more millions in advertising. Concerning the Super Bowl, which CBS will air this February, he said advertising time for 30-second commercials is selling quickly--"north of $2.5 million."