Move follows advertising squeeze

CBS Corp. CEO Leslie Moonves said Thursday the company is putting 50 radio stations in 12 markets on the block in a move to combat a sour economy, which is squeezing local advertising.

The stations, which make up 15% of CBS’ radio revenue, are in mid-sized markets, allowing the company to focus on large markets where there’s better chance for growth. CBS will use the proceeds to buy back stock.

The company’s also ramping up its web presence through CNET Networks, which it acquired in May for $1.8 billion in cash. Moonves, on a conference call to discuss financial results, predicted CBS’ digital revenue would hit $1 billion in the next three year, from about $600 million. He sees CNET adding at least two percentage points to CBS’ revenue and profit growth rate going forward.

To highlight the business, CBS also plans to break out digital as a separate business unit in its financial reports starting in the third quarter.

CBS’ net profit for the second quarter ended in June rose 1% to $408 million on a one-time, $127 million gain on the sale of its 37% of the Sundance Channel. Adjusted for one-time items, income fell to $355 million from $419 million.

Revenue nosed up 1% to $3.39 billion.

As media faces one of its toughest periods in recent years, CBS also lowered its outlook for 2008 operating income, which it now expects to rise at a rate in the “low single digits,” compared with the previous estimate of 3% to 5%, over 2007.

CBS has also slashed overhead by $150 million and, like its peers, continues looking for ways to cut costs.

Income for television — comprised of the CBS network and stations, CBS Paramount Network Television, distribution, Showtime and College Sports Net — fell 12% to $447 million.

Overall television revenue rose 2% to $2.2 billion. Advertising revenue fell 6%.

The bright spots were Showtime, and TV license fees, which surged 35% on higher syndication sales led by “CSI” overseas.

Affiliate revenue rose 5% on rate increases and subscriber growth at Showtime. Moonves said the pay network, whose original programming has taken flight, added 1.4 million subs over the past year. Its shows, which include “Weeds,” “Dexter” and “Californication,” recently garnered 21 Emmy nominations.

Radio posted income of $151 million, down 16%. Revenue fell 10% to $416 million.

Moonves said CBS has had preliminary discussions with potential buyers for the batch of mid-market stations for sale. He hopes to reach a deal in the next 30 days and close by the first or second quarter of 2009.

Outdoor advertising earnings dropped 20% to $92 million. Revenue grew 8% to nearly $600 million. International revenue rose 18%, partly on favorable foreign exchange rates.

At Simon & Schuster publishing, income fell 19% to $14.6 million. Revenue was down 7% to $186 million.

Despite the tough economic climate, Moonves stressed CBS’ strong cash position. Even after buying CNET, the company still has $800 million in hand. He said it could be put toward dividends, or share buybacks, or more acquisitions if a great opportunity comes along.

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