Eye on roll as Infinity, TV revs rise

Profit estimated at $65 mil

NEW YORK — CBS Corp. posted superb second-quarter results Monday as the TV network continues to gather steam and revenues mount at the company’s radio and billboard business, Infinity Broadcasting.

Lower operating and programming costs were also a factor as net income jumped to $95 million for the period ended in June from a loss of $4 million the year before.

Revenue rose 13% to $1.7 billion.

CBS doesn’t break out the network in its numbers, but revenue at the TV division — which also includes broadcast stations — rose 5.3% to $927 million. One analyst estimated that the network’s cash flow exceeded $20 million and sees it swinging to a full-year profit of $65 million from a loss of $110 million in 1998.

“The gains made in our television segment were dramatic,” said CBS CEO Mel Karmazin, with cash flow growth of 81% “and the first network primetime win in five years.”

No. 1 for year

CBS recently finished No. 1 in the Nielsen full-year ratings. Also, the company renewed its contract with TV chief Les Moonves last week.

Karmazin and chief financial officer Fred Reynolds said CBS spots for the network’s NFL coverage are nearly all sold, pacing two months ahead of last year. Scatter prices in general are very strong, the execs said, after CBS sold about 80% of its primetime inventory in the upfront market.

CBS said its profit figures include a one-time gain of $18 million from the sale of the remaining assets of Westinghouse Electric, CBS’s most recent incarnation before it became a pure media company.

CBS broke out its cable operations as a separate business for the first time this quarter. Revenue at the unit — which includes the Nashville Network and Country Music Television — rose 4% to $156 million.

Reduced interest

CBS noted that its net interest expense dropped to $46 million for the quarter from $85 million as proceeds from the initial public offering of Infinity Broadcasting late last year allowed the parent company to pay down debt.

CBS also said that, during the quarter, it benefited to the tune of $24 million from a reduced need for certain restructuring charges previously recorded for the TV segment. That was due to changes in programming decisions as well as higher voluntary employee terminations that reduced expected severance payments.

Quarterly numbers included a $24 million provision for losses associated with the financial travails of Spanish and Portuguese-language cable news network, CBS Telenoticias, which just declared bankruptcy. CBS recently sold a majority stake in the network to Grupo Medcom of Mexico.

The company made several key deals during the quarter that will continue to fuel growth. CBS agreed to acquire leading TV syndicator King World Prods. for $2.5 billion in stock, and Infinity agreed to buy Outdoor Systems for $8.7 billion. Those deals should close, respectively, in the third and fourth quarters.

Buys stations

CBS also inked deals to buy two TV stations in Texas and continues to take stakes in online companies in exchange for advertising and promotion. Karmazin said during a conference call that CBS plans to appoint a new head of its Internet division by Labor Day.

Kamazin said he’s optimistic the Federal Communications Commission will opt to relax rules restricting ownership of TV and radio stations in individual markets. The FCC has scheduled a key meeting Thursday.

CBS’s stock bucked a negative market, rising 94¢ to close at $44.87.

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