CBS Beats Street Expectations

Unlike rivals NBC (part of GE (GE)), ABC (part of Disney (DIS)), or Fox (part of News Corp. (NWS)), TV Network CBS (CBS) lacks the insurance and financial cover that comes from being part of a larger, more diversified conglomerate. As a standalone network, nearly two thirds of the company’s revenues come from advertising.

Tuesday morning CBS reported their earnings. Despite the exposure to a fluctuating ad industry, and despite challenges levied by the writers’ strike, the numbers proved mostly positive. Total quarterly revenues were up 14% to $3.65 billion during the first quarter. Overall, earnings came in at $244.3m or 36cents per share, a positive gain over 28cents per share earned during the same period last year. On an adjusted basis, the EPS were 40 cents.

Even though revenue growth was essentially flat year over year, both it and earnings per share beat analysts' consensus expectations of 34cents on revenues of $3.53b (via Reuters).

For the TV division, which carries the company, revenue was up only 1% year over year. On the surface, that sounds light but considering the strike impact and the high volume of reruns shown during the quarter, it was a victory. That's especially true given a 15% drop in ad revenue on the quarter.

As CEO Les Moonves put it, “The key question during the strike, was how will CBS rebound when original programming returns to the air? Would the viewers come back? And the answer for us is clearly yes. Most scripted shows returned at pre-strike levels.”

While the strike was on, better than expected syndication income helped carry the results. Syndication revenues were up 85%.

Closing the quarter, CBS had cash reserves of about $2.3b. Because of that strong balance sheet, the company announced that they’ll raise their dividend 8% to 27cents a share. It’s the sixth increase since 2006.

Looking ahead, CBS affirmed their guidance for the rest of 2008. Earnings are expected to grow in the range of 3% to 5% on a pre-EBIDTA basis.

There is some speculation CBS will bid for the Weather Channel during the current quarter as well. That deal, should it happen, is anticipated to cost between $3 and $4 billion. There is no official indication whether CBS is interested, or if they’ll bid.