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.''

CBS Corporation (NYSE: CBS) option implied volatility at record levels:

Reasons for the volatility:

1) Chairman Sumner Redstone, the largest shareholder, publicly feuding with her daughter and heir apparent, Shari Redstone.

2) CBS Radio facing increased competition if the Federal Communications Commission (FCC) allows Sirius Satellite Radio Inc. (NASDAQ: SIRI) and XM Satellite Radio Holdings, Inc. (NASDAQ: XMSR) to merge. The leader of the combined SIRI company would be current SIRI CEO Mel Karmazin, a past leader of CBS Radio and Viacom, Inc. (NYSE: VIA).

3) Decreasing broadcasting revenue growth guidance.

4) The expectations of a CBS News and Katie Couric partnership-spin-out.

CBS has a market cap of $18.8 billion with long term debt of $7 billion. CBS had September 2007 quarterly total income of $3.2 billion. CBS over all option implied volatility of 31 was above its 26-week average of 25 according to Track Data, suggesting non-directional price fluctuations.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

The Hat That Mumbles, aka Don Imus, is close to reaching agreement with Citadel Broadcasting (NYSE:CDL) to bring his talk show back to the public airwaves. According to Variety, Imus will spurn the interest of Sirius Satellite Radio (NASDAQ:SIRI) to join Citadel's network. The corporation, the third largest radio group in the U.S., owns ABC Radio, as well as a number of web sites and on-line radio stations.

Imus, you will recall, was canned by CBS Radio (NYSE:CBS) for his idiotic 'nappy-haired ho's' remark in reference to the Rutgers woman's basketball team. Ironically, the controversy proved to be a goldmine for Mumbles, who won a $20 million settlement from CBS Radio for improperly terminating his contract.

Variety wrote that, since ABC Radio traditionally chooses its own talent (and I use the word loosely), Citadel's signing of Imus would not guarantee that he would appear on ABC Radio stations. However, given the money that Imus will likely demand, I believe he'll have to run on the radio network in order for Citadel to recoup its investment.

Citadel Broadcasting Corp. (NYSE: CDL) may be struggling even more than its potential new employee Don Imus.

Shares of the Las Vegas-based company have tanked more than 55% this year because the company is in the radio business which continues to suck wind. Excluding the acquisition of ABC Radio from Walt Disney Co. (NYSE: DIS), the company's revenue fell 2 percent in the second quarter. Net income was a tiny $3.8 million, or 3 cents per share. The acquisition made Citadel the proud owners of New York's WABC, Imus' possible new home.

Imus seems to be a good fit with the rest of WABC's lineup which includes Sean Hanity and Rush Limbaugh, both of whom can be at least as offensive if not more so. The I-Man's legion of fans, many of whom responded to my posts on their hero, will no doubt flock to his new show. He will be hailed as someone who got beaten down by the forces of political correctness and lived. Advertisers will be attracted to the program like moths to a flame.

The question is will this new Imus be much different than the old one. If he's too nice, people won't listen. If he's too much like his old self, people won't think he's learned his lesson and advertisers will be turned off.

Interestingly, Craig Carton who is replacing him at CBS Corp.'s (NYSE: CBS) WFAN is no slouch in the controversy department himself. As the more talkative and funny half of the "Jersey Guys" radio show, Carton grabbed huge ratings and controversy for offending politicians and members of minority groups.

Back in April, I suggested that he would make a good replacement for Imus. Someone emailed Carton the post which he read on the air. I called into the "Jersey Guys" and spoke with him briefly. He promised to send me token of appreciation. I'm still waiting.

And Craig, you're welcome.

CBS Corp. (NYSE: CBS) needs hits and needs them now.

The company today reported lackluster first quarter results. Profit from continuing operations was $213.5 million on revenue of $3.66 million. Excluding one-time items, profit was 33 cents, beating the 32-cent average profit forecast and $3.61 million revenue forecast of analysts polled by Thomson Financial.

Operating income excluding some costs at the company's television business, its largest, fell 6% to $399 million, while revenue rose a mere 2% to $2.57 billion. As Bloomberg News points out ratings at the company's flagship network excluding sports are down 12% in the 18 to 49 year old demographic. Though CBS' "CSI" shows remain popular, the company is losing ground to ABC's "Grey's Anatomy" and Fox's "American Idol."

To the tune of just $12.5 million, the Federal Communications Commission on Friday wagged a white-gloved finger at four top radio broadcasters -- Clear Channel Communications Inc. (NYSE: CCU), CBS Radio (NYSE: CBS) (not CBS's best week), Entercom Communications Corp. (NYSE: ETM) and Citadel Broadcasting Corp. (NYSE: CDL) -- resolving a two-year payola investigation. "A breakthrough and a milestone" in the war on payola, FCC Commissioner Jonathan Adelstein called the settlement.

The FCC's longstanding regulations don't actually prohibit the pay-for-play system, they merely require its disclosure at the time of broadcast. Said Adelstein, "These rules are based on the basic principle that listeners and viewers are entitled to know who is seeking to persuade them so they can make up their own minds about the content."

Such a principle is hardly "basic," and ignorance of sponsorship gives no pass to indiscriminating radio listeners. Marketing pays our fare at every turn; we've become resigned to the notion that behind every song we hear, every TV image we view, every word we read (including these), a dollar sign usually lies quietly. The trick to Adelstein's basic principle is not in knowing who's paying the piper -- or who the piper's paying, in this case -- but in quieting one's cynicism enough to hear the music.

Don Imus is now officially unemployed having been dumped from CBS Corp. (NYSE: CBS) after losing his television gig on Microsoft Corp. (NASDAQ: MSFT) and General Electric Co.'s (NYSE: GE) joint venture, MSNBC.

My bet is that Imus will land another talk radio gig. The medium is starved for advertisers and needs all of the stars it can get -- even controversial ones. Plus, there are far bigger clowns on talk radio than Imus. But before he makes his triumphant return on either Sirius Satellite Radio Inc. (NASDAQ: SIRI) or XM Satellite Holdings Radio Inc. (NASDAQ: XMSR), Imus fans need to take a chill pill.

Imus got what he deserved. He didn't just cross a line, he pole-vaulted it. Yeah, people like the Reverends Jessie Jackson and Al Sharpton aren't without considerable faults of their own. AOL's Jason Whitlock, an African American, finds the pair embarrassing and recently wrote: "I'm calling for Jesse Jackson and Al Sharpton, the president and vice president of Black America, to step down."

This has nothing to do with political correctness -- which I detest as much as anybody -- either. There's just no way to defend what Imus said and how he said it. Sure, black comedians say similar sorts of things and get huge laughs. But context is everything.

The message is just as important as the messenger in this case. Free speech is never totally free. You can say quite a bit without fear of prosecution but you can't say anything you want. Some things are better left unsaid and unfortunately for Imus, he said them.

What should MSNBC do now that its dumped Don Imus?

According to the New York Times, Imus generated $50 million in revenue through his shows on CBS Corp.'s (NYSE: CBS) radio division and on the General Electric Co. (NYSE:GE) cable television network. Plus, Imus' program was dirt cheap for MSNBC to air. Imus probably won't lose his job in radio given the sad state of the medium.

MSNBC has got to come up with something. Morning television is a cash cow for both broadcast and cable networks. It can't just keep broadcasting a never-ending supply of prison documentaries. Seriously, MSNBC must have filmed every maximum security penitentiary in the country.

Let me offer a few suggestions for replacement for Imus.

1) Keith Olbermann -- He's smart, opinionated and under contract with the network. Moreover, he would regularly outrage Republicans which would make for entertaining viewing. I don't care that no one agreed with my suggestion that the network should promote him more prominently on its ratings-challenged "Nightly News with Brian Williams."

2) Craig Carton -- One of the "Jersey Guys," the top-rated afternoon talk show that manages to entertain, offend and educate residents of the Garden State. I'm sure Gov. Jon Corzine, a regular Carton target, would be happy to see him leave New Jersey. He got women to make plaster casts of their breasts that were later decorated and sold to raise money for breast cancer research. It was called "Cans for the Cure."

3) Greg Gutfeld -- I learned about this guy in a recent New York Times story that described him as a "compact but enormously animated man." He sounds awesome and I plan to DVR his show and write up a post on it.

4) Jeanne Moss -- This CNN reporter has cornered the market on off-the wall stories. Why not make her a star? Still, she's been at the Time Warner Inc. (NYSE: TWX)-owned network for 20 years and probably has a sweet deal.

5) Gwen Ifill -- She deserves a bigger audience than PBS. She's a seasoned journalist who keeps those troublemakers on "Washington Week" from getting out of hand.

This list is far from comprehensive.

Who would you like to see on MSNBC? Send in your suggestions and I'll pass them along to the network and they will be promptly ignored.

Don Imus' boorish behavior would have gotten him fired long ago if he were in any other line of work.

After a firestorm of controversy, CBS Corp.(NYSE: CBS) and General Electric Co.'s (NYSE: GE) MSNBC yesterday decided to suspend the controversial radio host for two weeks for making racially insensitive comments about the Rutgers University women's basketball team.

What would happen to someone at your office who like Imus used the phrase "nappy-headed ho's?" Would people complain? Would the boss talk to them? Would they have a chat with human resources? If they continually showed that type of attitude, would they be fired?

Imus is lucky that he works in the media.

He tried to mend fences by apologizing at an almost Bill Clinton-like rate. He's apologized to the team, apologized to the Rev. Al Sharpton and would probably apologize to any African-American he meets on the street.

This is a pretty big deal.

Media and political bigshots are regular guests on "Imus in the Morning." Publishers send their top authors there to flog their books. It's kind of amusing that these people love Imus and hate his rival Howard Stern when the only difference between them is that Stern actually is witty.

Along with Stern, Imus has inspired a generation of shock jocks and talk show hosts who think that they can say whatever they want, whenever they want on the air. But instead of being provocative, most of them just sound boorish.

Imus is vowing to change the "tenor" of the show. I guess he deserves another chance, or is it the fifth one? I'm not sure.

Joel Hollander is resigning and will be replaced Dan Mason as President and CEO of CBS Corp.'s (NYSE: CBS) radio unit. According to analysts, Holdander's departure could be a signal of a move by the company to sell off some of its radio stations. No official reason has been given for his departure and Bank of America securities analyst Jonathan Jacoby made it clear that he was speculating as far as the sales of the radio stations.

If CBS does pursue the sale of its radio stations it will be interesting to see how much interest there is. With the emergence of satellite radio grabbing headlines, FM radio hasn't been in the news so much of late.