Though write-offs on its former NFL franchise and other charges meant CBS Inc.’s fourth quarter failed to meet Wall Street estimates, the Eye web still posted solid gains as profits rose 40% from the year-ago quarter to $ 46.4 million, or $ 2.77 per share.
Estimates had ranged from around $ 3.20 to $ 3.25 per share, and the unfavorable comparison prompted investors to drive CBS stock down as much as $ 8 a share on the news. But by the closing bell, some had realized the quarter was strong in many respects, and the stock rebounded to close at $ 311, off just $ 2 .25.
“You have to adjust for those items,” noted Brown Bros. Harriman analyst Jay Nelson about the write-offs. But, he added, “People who know all the details will be pleased” with the results.
The shortfall stemmed from write-offs of about 27 cents a share on equipment and other items after CBS lost the NFC broadcast rights to Fox, Street sources said. They also noted that syndication write-offs at CBS stations and losses on canceled programming also dented the bottom line. A CBS spokesman declined comment on the matter. The network has previously discussed the possibility of write-offs following the loss of football rights.
Operating income added 58% to $ 62.7 million last quarter as the CBS Television Network reported its first fourth-quarter profit since 1985. Revenues rose 8% to $ 1.04 billion, helped by firmer pricing in primetime and “Late Show With David Letterman.” Double-digit growth at its New York, Chicago, Philadelphia and Miami stations also pumped sales.
For the full year, CBS earned a record $ 326.2 million, or $ 20.39 per share. That’s about 300% above 1992, after a one-time benefit of $ 3.80 per share related to tax, legal and insurance matters and a gain of $ 1.53 per share from the sale of securities.
Full-year operating income climbed 128% to $ 411.2 million, but revenues held steady around $ 3.51 billion, due to less special-events sports programming in 1993 after 1992’s Olympic Winter Games and Super Bowl broadcast.
The CBS TV Network posted higher unit pricing across the board and got a lift from 20% sales growth at CBS Enterprises, which distributes CBS News programs, “Rescue: 911” and “Dr. Quinn, Medicine Woman.”
“With the end of fin-syn, I think that is the future in the network business — to become a quasi-producer and globalize,” said Morgan Stanley analyst Alan Kassan.
The stations group also notched up record annual operating profits, with each of the seven owned stations increasing profits and operating margins, except for KCBS-TV (Los Angeles). A stronger ad environment also helped CBS Radio’s profits increase by 50%.
CBS chief Laurence Tisch attributed the growth to the success at the web’s TV network and an upturn in ad demand. He said in a statement that the Eye is confident it “will produce growing profits and will generate substantial amounts of free cash flow”.
Annual interest income edged up almost 1% to $ 110.4 million, while interest expense dropped 30% to $ 42.3 million. Total debt at Dec. 31 was $ 591.2 million.
Analysts expect CBS to benefit from its broadcast of the Winter Olympics but say those gains might not match what the web would have earned from its regular primetime programming.