CBS profits slip in second quarter

Radio unit takes hard hit, but Imus not to blame

Radio was the culprit behind CBS’ profit decline in its most recent quarter — but don’t blame Don Imus.

The company saw operating income drop 48% to $404 million vs. the second quarter last year, as the radio unit saw profit dive 18%.

CBS Corp. prexy-chief exec Leslie Moonves and other execs said during a conference call Tuesday that the hit in the radio unit was more attributable to the industrywide slump than to the departure of the former shock jock, who was based at CBS’ all-sports powerhouse WFAN-AM New York.

On the call, analysts refrained from grilling CBS chairman and controlling shareholder Sumner Redstone about succession issues stirred up by the flurry of media reports of a feud between Redstone and daughter Shari, previously thought to be in line to follow her 84-year-old father as titan of CBS Corp. and Viacom. There was some frank discussion, however, of whether CBS or Viacom was a takeover target for private equity.

Sumner Redstone acknowledged that there have been “a lot of discussions inside and outside about taking one of these companies (Viacom or CBS) private.”

He stressed that such a move was “not on the front burner. But you can rest assured it will receive the consideration it should.”

Analysts also pressed Redstone about a potential stock buyback, for which Wall Street has been clamoring; CBS’ stock then fell about 3% in part because investors did not hear a commitment to the buyback.

Company’s stock has fallen about 10% since its 52-week high last month but is still up more than 15% vs. a year ago.

In response to its radio woes, conglom has shed smaller-market radio stations and also brought in a new CEO, Dan Mason, while revamping the formats at a number of big-market stations.

The process has taken longer than some on Wall Street, hoped, however: Profit in the unit shrunk to $179 million, and revenue dropped 11% to $464 million.

Imus was no doubt responsible for some of that revenue drop. Host, who ankled this spring amid controversy over racist comments he made about the Rutgers women’s basketball team, garnered high CPMs for his show on WFAN.

CBS also collected a licensing fee from MSNBC, where Imus’ daily morning show was simulcast.

But costs to retain the talent and produce his show were said to be high, which cut into the bottom line. CBS is currently negotiating with former New York Jets quarterback Boomer Esiason to replace Imus in the all-important morning slot.

CBS Radio is reportedly also negotiating with Imus for a settlement that would formally exempt him from the last year of his contract and thereby allow him to move to another station.

Imus has laid low since his departure, though there have been reports he could jump to satellite.

Outdoor and publishing divisions showed the greatest improvements in the quarter for the company, showing revenue gains of 4% and 14%, respectively.

For CBS Corp. overall, revenue slid 3% to $3.4 billion vs. a year ago. Numbers were skewed in part by the company’s sale of its theme parks division in the second quarter last year, which netted the firm nearly $300 million in profit, as well as by the closure of UPN.

In the television division, revenue dropped 4% and operating income fell 3% despite CBS’ No. 1 finish among total viewers in the 2006-07 TV season.

Execs explained the slide by saying that the NCAA basketball tourney moved to the first quarter this year after figuring into the second quarter last year; they also pointed to the sale of a number of CBS-owned stations as a reason for the drop.

Also on the call, Moonves ticked off a list of TV achievements. CBS not only won in the total viewers race this year but sports eight of the top 20 shows on broadcast.

And he said that the news division, whose flagship evening-news show has struggled in the ratings, has been drawing ad-rate increases to go along with its 19 Emmy noms.

Moonves also reassured Wall Street about the steps the Eye is taking to guard against the threat of a work stoppage in Hollywood later this year or next.

“We are well prepared. We have plenty of reality, plenty of newsmagazines, plenty of gameshows,” he said.

Moonves made a point of giving some love to conglom’s feevee channel Showtime, which he compared to “an Off Off Broadway play” at an investor confab a few years back. Moonves said he was “really pleased” with its program slate and focus on provocative original series such as “Weeds,” “Dexter” and “The Tudors” under the direction of entertainment prexy Robert Greenblatt.

Net has “more original series in production than at any time in network history,” he said, even flogging upcoming David Duchovny comedy “Californication.”

“Yes, that is the show’s name,” Moonves quipped.

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