CBS show sales help offset drop in 3Q ad revenue

The sale of popular TV shows partly offset a drop in third-quarter advertising revenue at CBS Corp. but the company said ad trends are improving in the final three months of the year.

"The light at the end of the tunnel continues each day to get brighter," Sumner Redstone, the executive chairman and controlling shareholder at CBS, told analysts on a conference call Thursday. "As the economy recovers, CBS will be a leading beneficiary in the upturn."

CBS, which is based in New York, posted net income of $208 million, reversing a $12.5 billion loss a year ago in a quarter that was marred by impairment charges.

Adjusted for one-time items, the earnings came to 25 cents per share, cruising past analyst expectations for 22 cents per share.

Revenue fell less than 1 percent to $3.35 billion, also handily beating forecasts of $3.20 billion.

Sales of shows "Medium," "Criminal Minds," "Ghost Whisperer," "Everybody Hates Chris," and "Numb3rs," to other networks as well as rate increases for pay-TV service Showtime more than offset a 5 percent drop in advertising sales.

Total television revenue grew 9 percent to $2.27 billion but revenues at its radio stations, outdoor billboards and online sites fell.

Chief Executive Leslie Moonves said prices for spot TV ads in the fourth quarter were up 25 percent compared to the early buying period for the fall season known as the "upfronts."

Because the company held back ad inventory earlier to get higher prices, spot ads will make up about 35 percent of the inventory in the current quarter. Along with price increases, spot ad revenue will double in the fourth quarter compared to a year ago, Moonves said.

"It will affect the fourth-quarter network revenue in a very positive way, and it is not insignificant," Moonves said.

The company maintained its outlook for the fiscal year for operating income before depreciation and amortization to fall between $1.73 billion and $1.93 billion.

CBS is also renegotiating agreements with cable and satellite operators so it is paid when they carry the CBS network signal or feeds from its local stations.

Moonves said such deals should add "hundreds of millions of dollars to revenues annually" and make the broadcast business more like cable channels, which reap advertising and earn monthly fees ultimately paid by consumers.

The company was faced with rumors Thursday about the possible departure of Oprah Winfrey's talk show from broadcast television to her own cable channel, The Oprah Winfrey Network. Moonves said on a conference call with analysts that talks were under way to keep her show from leaving.

CBS Television Distribution earns revenue by selling "The Oprah Winfrey Show" to local TV stations nationwide, and in most large markets her show appears on the local ABC affiliate, although it also runs on local NBC, CBS and Fox stations.

The queen of daytime television is in the 24th season of her talk show. In a statement released Thursday, Winfrey's production company, Harpo Productions, said "she has not made a decision yet" on a move to cable but will make one before the end of the year.

"As we have stated repeatedly, we love Oprah and if she wants to continue her show then we want to continue to be in business with her," CBS Television Distribution said in a statement.

Earlier Thursday, blog Deadline Hollywood said Winfrey planned to announce she would end her daytime talk show when the contract expires and move it to The Oprah Winfrey Network, based in Los Angeles. The cable network, which has yet to launch, is a joint venture between Winfrey and Discovery Communications Inc. A Discovery spokeswoman declined to comment.

Shares fell 18 cents in after-hours trading Thursday following the earnings release, after closing the regular session up 89 cents, or 7.5 percent, at $12.79.