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Shares of CBS Corp. (NYSE: CBS) are trading up this morning after the corporate home of CSI, Two and a Half Men and Katie Couric, reported better-than-expected first quarter results.Net income was $244.3 million, or 36 cents per share, up 14% from $213.5 million, or 28 cents, the New York-based company said in its earnings release. Revenue was little changed at $3.65 billion. The results beat Wall Street estimates of profit of 33 cents on sales of $3.55 billion.
Strength in the company's Television and Outdoor businesses overcame weaknesses in the Radio and Publishing divisions. The results were bolstered by an 85% gain in television licensing fees which were helped by higher domestic and international syndication sales. Rate increases and subscriber growth at Showtime Networks and CBS College Sports Network boosted affiliate revenues by 6%. The company also boosted its dividend by 8% to 27 cents per share.
Stanford Group analyst Fred Moran had an optimistic take on the results.
"It shows CBS is holding its own despite the recessionary advertising environment in the U.S," he told Bloomberg News. "The yearly dividend is now a 5 percent yield, and it's one of the cheapest stocks in the media group.''
Ratings for the network's big shows such as CSI:Miami and Two and a Half Men have rebounded since the end of the writers' strike in February, according to Bloomberg. Advertisers also will ratchet up spending to encourage people to spend their economic stimulus payments which should benefit the Television, Radio and Outdoor businesses. Radio, though, will continue to suck wind as will Publishing. The shares would rise further if CBS disposed of one or both of those units.
For now, the company will plod along as advertising sales continue to slow as marketers demand steep rate discounts. CBS, like other mainstream media companies, is still reeling from the sea change caused by the Internet. Odds are good that it will merge its floundering news division with CNN. Couric's time as CBS Evening News anchor is coming to an end sooner rather than later despite protestations from CEO Les Moonves to the contrary.
Investors should avoid this company as long as it's under the control of the mercurial billionaire Sumner Redsone.
He cares most about Sumner Redstone. Helping shareholders is a secondary concern.
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