Eye drops $7 mil in 2nd quarter

NEW YORK — The CBS-TV network posted a $7 million loss in the second quarter, providing fresh evidence that ratings stability hasn’t helped the Eye web’s profit picture.

The network’s third consecutive quarterly loss contrasts with $107 million in broadcast cash flow in the second quarter of 1996. The loss comes amid a 7% revenue decline from the year-ago period, to $631 million.

The results come as ABC’s profits have been severely crimped by its ratings slide. Of the Big 3, only NBC remains a healthy profit-maker.

Overall, Westinghouse Electric Corp.’s media group, which includes radio and TV stations, syndicator Eyemark Entertainment and the network, turned in cash flow of $261 million, down 23% from $340 million in the year-ago quarter, with figures restated to include Infinity Broadcasting, which was acquired Dec. 31. But revenues were up 17%, to $1.28 billion, reflecting the Infinity purchase.

Cash flow, the chief indicator of profitability in the broadcasting business, is defined as earnings before interest, taxes, depreciation and amortization.

The CBS Radio Group reported a 23% jump in cash flow, to $157 million, and robust revenue growth of 19%, to $378 million, excluding the effect of the Infinity buyout.

But the gains at radio, Westinghouse’s media crown jewel, were more than offset by the TV network, which suffered from revenue declines and the effect of purchase-price accounting on program rights.

Essentially flat

TV station revenues were off 4%, with cash flow essentially flat, the company said, as cost-cutting moves helped ease earlier year-to-year declines.

CBS Radio chairman Mel Karmazin was given authority over the TV station group during the quarter, spurring the departure of CBS’ president, Peter Lund, and has since moved to cut costs and boost revenues by adding to station sales teams.

“Momentum at our television stations has improved rapidly as a result of our recent management actions and a strong May (ratings) book,” Westinghouse chairman-CEO Michael Jordan said in a statement. “We expect our ongoing growth, particularly in the major markets, to benefit significantly from greater interaction among our television, radio and outdoor businesses.”

Analysts viewed the second-quarter results as a continued sign of CBS’ difficulties in regaining ratings momentum and reaching younger demographics that would allow it to charge higher ad rates.

Not expected

“It was disappointing to see the TV stations and the network in the quarter didn’t rebound, but I don’t think anybody expected that,” said Frank Bodenchak, a Morgan Stanley analyst. He projects the network will rebound to a $30 million to $40 million profit in the third quarter, in part from the absence of the Olympics, which drained revenues from networks competing against NBC for viewers last summer. But the fourth quarter should prove difficult for the TV station group, without the political ad windfall of last year.

As a whole, Westinghouse reported second-quarter net income of $1 million, vs. an $89 million loss in the 1996 quarter, on sales of $2.41 billion, a 12% gain.

Westinghouse’s stock fell 62-1/2¢ Monday, to $23.75, on the earnings news.

Westinghouse expects to complete the spinoff of its industrial assets into a new company by Sept. 30, leaving media interests and, temporarily, the Thermo King trucking unit, in the parent company, to be renamed CBS Corp.

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