CBS (NYSE: CBS) -- major competitor of Disney's (NYSE: DIS) ABC, News Corp.'s (NYSE: NWS) Fox and General Electric's (NYSE: GE) NBC -- issued a lackluster earnings report for Q2 on Thursday. The market sent the stock down 3% at the end of the trading day. The outlook and the continued softness in the economy seems to be giving Wall Street pause in terms of CBS' prospects. Also, the top-line growth was nothing to write home about.

Revenues increased a scant 1% to $3.4 billion. Adjusted earnings per share on a diluted basis, which exclude a benefit from an asset sale, were $0.53 versus $0.57 in the year-ago period. Here are a couple more bad stats. Operating income on an adjusted basis took a dive of 13%. Free cash flow was almost 19% worse this quarter compared to last year's Q2. Not very cool, huh? According to this AP article, CBS beat by a penny, but is that really so impressive given the full context of things? No.

Still, I don't think shareholders should revolt just yet. The free cash flow on the six-month timeframe went up 6%, and even with the decrease experienced in Q2, the cash flow was enough to cover the dividend, which is a major attractant of the stock. Income investors who like the media sector definitely have to keep CBS on their list of potential buys, considering the company's 6%+ yield.

CBS believes that the advertising slowdown will inhibit growth for the rest of the year. So don't expect any fireworks in upcoming quarters. I like that management will be getting rid of fifty radio stations and intends to use the proceeds to buy back stock. That's shareholder friendly, of course. What probably won't be shareholder friendly is the stock itself. I'm not sure it's going to do much of anything while the economy suffers through its current malaise. But you do get that dividend. If investors are patient, then they should see some capital appreciation down the line.

Disclosure: I own Disney and GE; positions can change at any time.