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CBS slashes dividend, but not Moonves' paycheck

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February 18th, 2009

Update: Nicholas Carlson at the Silicon Alley Insider took notes from the CBS earnings conference call and has them here.

CBS' earnings came in mostly around the already lowered expectations, so the results weren't particularly surprising.  Nor was the slashing of the dividend surprising -- it was cut from $.27/share to $.05/share.   It had been rumored CBS would do this for a while since it has a big loan coming due in 2010 that it will need the cash to pay for.  Total company revenue (which includes billboards and radio in addition to the television network and TV stations it owns)  was down to $3.53 billion compared to $3.76 billion in the year ago quarter.

Television revenues were down 8% versus the year ago quarter, but radio (down 18%) and outdoor (down 15%) were worse.   Overall, aided by growth of interactive revenue (mostly Internet) of 218% versus a year ago, overall revenue was only down 6% for the quarter.

Profits were down much more substantially though, earnings per share were $.20 for the fourth quarter versus $.42 a year ago, down over 50%.

Unsurprisingly, CBS attributed it to slowdown in advertising:

"We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come," said Sumner Redstone, Executive Chairman, CBS Corporation. "But one thing that is clear to me is that Leslie and his team are managing our businesses superbly with an eye toward future growth. CBS's strength as a content provider will continue to position it for success."

"The marketplace was under increasing pressure throughout 2008, yet we were still able to deliver annual revenues of nearly $14 billion, adjusted operating profits of almost $2.8 billion and free cash flow of just under $1.7 billion - results that reflect the quality of our content and the enduring strength of our operations," said Leslie Moonves, President and Chief Executive Officer, CBS Corporation. "As the contraction of the economy accelerated in the fourth quarter, our businesses were affected - in particular our local businesses - but we did not deviate from our ongoing strategy: to create winning content, regardless of the marketplace. At the same time, we continue to exercise a very disciplined approach to capital investment, and have taken substantial costs out of all of our businesses, in order to help margins going forward. We are confident that our considerable operational accomplishments will help position us to capitalize on growth opportunities as soon as the economy improves."

The Company also announced today that its Board of Directors authorized a reduction in the quarterly dividend from $.27 to $.05 per share. The dividend is payable on April 1, 2009 to stockholders of record as of March 11, 2009.

Regarding the dividend, Moonves said: "We have always been vigilant in maintaining our balance sheet in order to provide the strong financial flexibility that is more important than ever in these uncertain economic times. That's why we believe this is a prudent action to take while we await improvement in the economy and the credit markets. CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company. However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend." -- you can read the full press release.

 
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