Moonves
Les Moonves is high on Showtime, which houses hot series 'Weeds.'
Investors reacted calmly to the fourth-quarter financial report of newly independent CBS, despite a hefty $9.5 billion hit to write down the value of its TV and radio stations.
That put CBS $8.8 billion in the red, following an $18 billion writedown the year before on radio and outdoor advertising.
"I'm very pleased that the separation is completed and we start the new year with clear decks," said CEO Leslie Moonves. He added CBS is already "more focused and more nimble" than it was before formally splitting from Viacom on Jan. 3.
His comments came a day after CEO Tom Freston unveiled the first stand-alone results of the "new" Viacom, where messy studio numbers overshadowed the perf of MTV Networks.
Both companies had mixed results. Both talked about clean slates.
But if the two must be compared, it's far from a slam-dunk for Freston's so-called growth company.
Viacom shares fell 2.29% Thursday after its report. CBS eased 0.12%, in line with the overall market.
"We are not an old-media company," insisted Moonves, citing "Survivor" downloads on CBS.com, Showtime downloads on iTunes and cell phone deals. He said the company has set up a new research initiative, CBS Vision, to better understand its audience and opportunities.
The charges CBS reported are non-cash and reflect the difference between the value of the assets on the company's books and a revised -- in this case lower -- fair value estimate based on the current market. TV accounted for $6.4 billion and radio for $3.1 billion of the charge.
CBS had warned Wall Street that writedowns were coming as the broadcast biz continues to challenge media groups large and small. "The charge is likely to reinforce negative sentiment regarding the long-term outlook for the divisions," acknowledged Merrill Lynch analyst Jessica Reif Cohen.
But Moonves said radio is looking up. On the TV side, he promised a stronger year post-Olympics and as political ad spending starts to climb ahead of the midterm elections.
Plus, he sees profits right out of the gate from the CW, the network being created from a merger of CBS' UPN and Time Warner's the WB and launching this fall. "We are putting together a group of affiliates that are going to be spectacular," Moonves promised.
CBS and Tribune stations, covering nearly 50% of the nation, have inked long-term CW affiliation deals, and the net is meeting with other station groups to get them aboard. Moonves said while the CW is seeking reverse compensation -- meaning the stations would pay the net for programming -- it is "also looking at what are the best stations for our network" -- meaning it's willing to negotiate.
"We have offers in many markets to pay reverse compensation, (but) that's only going to be one of the factors," he said.
News Corp. on Wednesday unveiled My Network TV, a programming block created for its own stations that are currently UPN affils and will be shut out when the CW launches. It's also going to try to sell the mini-network to independent stations in competition with the CW. Fox News' Roger Ailes is overseeing the venture.
"No one should ever underestimate Roger Ailes. But it took UPN and WB 12 years, and they're better off together," said Moonves.
Moonves also was upbeat on cable net Showtime, which was recognized with a Golden Globe, for actress Mary-Louise Parker in original series "Weeds."
Over time, he said, "There's no reason it won't become for CBS what HBO is for Time Warner."
Asked about the upfront, Moonves said, "Our people are telling us (it) will be up more than 4% -- and we have far exceeded what the expectations are." ABC, Fox and CBS are "all doing extremely well. NBC is having some gains here and there. The network groups are doing extremely well, and it's time for everyone to recognize that," he declared.
CBS said quarterly revenue nosed up 2% to $3.8 billion. For 2005, advertising accounted for 70% of revenue.
Costs for the quarter, mostly associated with the separation from Viacom, soared by $12 million to $42 million.
In television -- including the CBS and UPN nets and stations, TV production and syndication and Showtime -- operating income rose 9% to $394 million. Revenue inched up 1% to about $2.5 billion. Advertising revenue rose 6%.
Radio profits fell to $205 million from $231 million. Revenue eased 1% to $543 million.
Outdoor advertising has perked up, posting an 18% jump in profits to $96 million. Revenue grew 3% to $527 million. CBS owns the largest out-of-home advertising group in North America. It said it's been able to end unprofitable city-transit contracts.
At the division CBS calls parks/publishing, profit surged to $23 million from $9 million. Revenue rose 15% to $276 million. Company cited fourth-quarter titles at Simon & Schuster -- including David McCullough's "1776" -- and winter events at the theme parks. The parks are currently up for sale. Execs said Thursday that Simon & Schuster isn't.
Contact Jill Goldsmith at
jill.goldsmith@variety.com