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CBS Corp. Reports Operating Results (10-Q)

August 06, 2009 | About:

CBS Corp. (CBS) filed Quarterly Report for the period ended 2009-06-30.

CBS Corporation is a mass media company with constituent parts that reach back to the beginnings of the broadcast industry as well as newer businesses that operate on the leading edge of the media industry. The Company through its many and varied operations combines broad reach with well-positioned local businesses all of which provide it with an extensive distribution network by which it serves audiences and advertisers in states and key international markets. It has operations in virtually every field of media and entertainment including broadcast television (CBS and UPN) cable television (Showtime) local television (CBS Television Stations) television production and syndication (CBS Paramount Television and King World) radio (CBS Radio) advertising on out-of-home media (CBS Outdoor) publishing (Simon & Schuster) theme parks (Paramount Parks) digital media (CBS Digital Media Group and CSTV Networks) and consumer products (CBS Consumer Products). CBS Corp. has a market cap of $5.8 billion; its shares were traded at around $8.54 with a P/E ratio of 7.3 and P/S ratio of 0.4. The dividend yield of CBS Corp. stocks is 2.3%.

Highlight of Business Operations:

Affiliate revenues increased $28.9 million, or 10%, to $328.8 million for the three months ended June 30, 2009 principally reflecting growth in subscriptions and rate increases at Showtime Networks, and higher retransmission revenues. For the six months ended June 30, 2009 affiliate revenues increased $60.3 million, or 10%, to $657.1 million, principally driven by rate increases and subscriber growth at Showtime Networks and CBS College Sports Network, and higher retransmission revenues.

Programming expenses for the three months ended June 30, 2009 increased $56.8 million, or 8%, to $762.2 million and for the six months ended June 30, 2009 increased $81.1 million, or 5%, to $1.85 billion primarily reflecting the impact of the Writers Guild of America ("WGA") strike which reduced programming costs in 2008, higher costs associated with cable programming and a charge of $14.0 million recorded in the second quarter of 2009 for the write-down of programming inventory to its net realizable value.

For the three months ended June 30, 2009, interest expense decreased $.4 million to $133.9 million and for the six months ended June 30, 2009, interest expense decreased $5.9 million to $267.1 million. The Company had $6.99 billion at June 30, 2009 and $7.09 billion at June 30, 2008 of principal amounts of debt outstanding (including current maturities) at weighted average interest rates of 7.2% and 7.1%, respectively.

For the three months ended June 30, 2009, "Other items, net" reflected a net loss of $3.5 million primarily consisting of foreign exchange translation losses of $2.9 million and losses of $.7 million associated with securitizing accounts receivables. "Other items, net" reflected a net loss of $15.4 million for the six months ended June 30, 2009 primarily consisting of foreign exchange translation losses of $14.7 million and losses of $1.3 million associated with securitizing accounts receivables.

For the three months ended June 30, 2008, "Other items, net" of $124.9 million consisted of a gain of $127.2 million on the sale of the Company\'s investment in Sundance Channel and foreign exchange translation gains of $1.2 million partially offset by losses of $3.5 million associated with securitizing accounts receivables. "Other items, net" of $124.7 million for the six months ended June 30, 2008 consisted of a gain of $127.2 million on the sale of the investment in Sundance Channel and foreign exchange translation gains of $5.2 million partially offset by losses of $7.7 million associated with securitizing accounts receivables.

The provision for income taxes was $56.9 million and $232.9 million for the three months ended June 30, 2009 and 2008, respectively, and $65.7 million and $384.2 million for the six months ended June 30, 2009 and 2008, respectively. The provision for income taxes for the three and six months ended June 30, 2009, was impacted by a reduction of deferred tax assets associated with stock-based compensation of $23.3 million and $42.1 million, respectively. This reduction reflects the difference between the estimated tax benefit recognized based on the grant date fair value of the stock-based compensation award versus the actual tax benefit realized based on the market value on the date of vest. The provision for income taxes for the six months ended June 30, 2009 was also impacted by the reversal of certain international net operating loss carryforwards of $13.4 million.

Read the The complete ReportCBS is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC, NWQ Managers of NWQ Investment Management Co, Brian Rogers of T Rowe Price Equity Income Fund, David Williams of Columbia Value and Restructuring Fund, David Dreman of Dreman Value Management, Richard Aster Jr of Meridian Fund, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.

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