• by Wayne Friedman , May 4, 2007

Shrugging off a lackluster earnings report, CBS President/CEO Leslie Moonves told Wall Street to look to the future for its TV network. CBS will get paid for DVR viewership during the upcoming advertising upfront negotiations, suggesting better returns to come.

CBS results slightly beat Wall Street analysts' estimates. CBS said revenue rose 2% to $3.66 billion--trumping Wall Street calculations of $3.62 billion, although TV and radio divisions took a hit. Publishing went up 27%, while outdoor revenue was essentially flat. For Moonves, however, the big news is DVR ratings.

"For the first time, I am confident we will get paid for DVR viewing in this year's upfront, turning a current problem into a big and ongoing asset," Moonves told investors in a conference call. He noted that DVR viewers will be counting soon by Nielsen.

"Seven percent [of those viewers] are not being counted," he added. "That's a big chunk of viewing. That's 7% that will go right back into our numbers." Media agency executives say it won't come without some giveback. Many deals will be struck using average commercial ratings--which can be anywhere from 5% to 7% lower than current average TV program ratings, which are the basis of this season's ad deals.

Adding back in DVR viewership--whether over one, three or seven days--will help even out lower overall broadcast erosion this year, which hit networks anywhere from 10% to 15%.

That could prove telling, since CBS Corp. first-quarter net income took a hit--dropping 5.9% to $213.5 million, specifically because of lower results from its syndication business. And that's due to lower licensing revenues for syndication shows. Television license fees decreased 31%, principally credited to the absence of 2006 basic-cable availability and off-network syndication sale of the sitcom "Frasier."

Radio revenues also suffered, plunging 9%--still reeling from Howard Stern's departure a year ago. Near term, it might take another hit with the lost of DJ Don Imus, who was recently fired by CBS for his remarks concerning the Rutgers University Women's basketball team.

Television revenue rose 2% to $2.6 billion, with ad revenue climbing 9%, thanks to the Super Bowl and the NCAA basketball tournament. But prime-time advertising revenue fell 5% in the first quarter, the company said.

Moonves expects the presidential race will heat up later this year, meaning a big boost to CBS-owned stations in the fourth quarter.