CBS Corp.’s normally stalwart broadcast biz showed some vulnerability in the conglom’s Thursday earnings report.
Operating income at the television division dropped 9% for the first quarter, on the heels of a 5% drop in primetime ad revenue, execs said.
While there were rosy numbers at the division — overall revenue at the unit rose 2%, and ad revs jumped 9% — they were driven in part by special events, such as the Super Bowl, which CBS aired this year, and by its television stations, whose revenue climbed by single-digit percentages.
Company also faced a 31% drop in television licensing fees, though comparisons were difficult because of a big boost from the sale of “Frasier” into syndication last year.
Overall for the quarter, CBS saw profits decline 6% to $214 million, mainly on a tax charge connected to the sale of radio stations. Revenue rose to $3.65 billion from $3.58 billion.
Net remains America’s most-watched, but flagship franchises like “CSI” and “Survivor” have softened some in the ratings.
In a conference call with analysts, CBS topper Leslie Moonves said the conglom’s nascent movie shingle is ramping up under exec Bruce Tobey, with the first pic from CBS Films set for release as early as fall 2008. Moonves said the hunt was on for creative execs as well as for financing, noting that there are some “very attractive financing” options available.
On the call, Moonves ticked off the achievements of the broadcast net, citing the fact that CBS will finish with the most total viewers and the most adults 25-54 for the fourth straight year.
He also noted improvement in the younger 18-49 demo, as the net will leapfrog ABC to land in second place after coming in third last year.
But Moonves also acknowledged that the “network collectively has faced some challenges in the last few months.”
He then he threw down the gauntlet for new ratings category “live-plus” (live viewing plus DVR playback), setting the stage for a battle with Madison Avenue at the upcoming upfronts.
“A great deal of the problem (over the last few months) is caused by one simple thing — the failure to count millions and millions of people who are watching hit programs on their DVR,” he declared.
Moonves promised, “Those people will be counted, and we will be paid for them,” saying he was “confident we will get paid for DVR viewing in this year’s upfront.”
Moonves estimated that about 7% of viewers in adult demos were not included in Madison Avenue tallies. “That’s a big chunk of the viewing pie,” he said.
For the quarter, outdoor advertising and publishing were the workhorses for CBS. Outdoor revenue jumped 2% to $462 million, while publishing jumped 27% to $229 million.
Radio dropped 9% to $398 million, and the unit could be facing more issues as it copes with the loss of its biggest moneymaker, Don Imus.
CBS continued to predict that revenue and operating income for the year will be comparable to that of 2006.
Moonves also commented on the conglom’s decision to partner with Web distributors instead of joining the video-sharing site of News Corp. and NBC.
“We felt it was far better to set up our own network, which gives us the ability to not be a part of joint ventures, which are always difficult, and to take our content and not be exclusive,” he said.
But he allowed, “That’s not ruling out that we’d consider doing some business with the NBC and News Corp. venture.”