CBS posts $12.5 billion loss, but commits to dividend

NEW YORK (Reuters) - CBS Corp posted a $12.5 billion quarterly loss, hurt by a massive write-down and the deteriorating advertising market, but its shares rose 6 percent after its executive chairman and largest shareholder Sumner Redstone affirmed his commitment to the company.

Investors also appeared relieved that the TV and radio broadcaster reiterated its plans to pay a dividend, even as it took a previously announced $14.1 billion non-cash charge in the third quarter for goodwill and other assets that lost value because of the economic turmoil.

But some analysts, including Caris & Co's David Miller, said investors may be placing too much emphasis on the CBS dividend.

"We find it near incredulous that the Street is placing so much emphasis on CBS' juicy 12.4 percent dividend yield, and little emphasis on the notion that CBS will see a severe contraction in earnings next year," Miller wrote.

Redstone, on a conference call, attempted to put to rest concerns over his commitment to the media empire he built and controls through voting shares.

Redstone recently sold stock in CBS and sister company Viacom Inc to pay down debt for his privately held National Amusements Inc (NAI). The move raised questions about the future of CBS, specifically, whether Redstone would sell more stock or even the entire company.

"Obviously, these were extraordinary circumstances, which resulted in NAI having to take action, which is clearly atypical," he said. "Let me make it sure, clear, certain. NAI has no intention of selling a single share of Viacom or CBS."

CBS shares rose to $9.25, clawing back some of the 40 percent they lost in the last month. Viacom shares rose 7.1 percent to $18.92.

But Redstone and CBS Chief Executive Les Moonves also acknowledged the risks posed by the economic downturn, which has companies rethinking the amount they spend on commercials.

Moonves said he intends to cut costs, including capital spending, and remained committed to pay a dividend. "The dividend is front and center in our strategy to return value to our shareholders," he said.

ADVERTISING DECLINES

Earlier this month, CBS warned that declines in advertising would undercut profit for the third quarter and full year.

In Thursday's report, CBS posted a third-quarter loss of $12.46 billion, or $18.58 per share, compared with a profit of $343.3 million, or 48 cents a share, in the year-earlier period.

Excluding special charges but including stock-based compensation expenses, CBS earned 40 cents a share, which was in line with analysts' expectations, according to Reuters Estimates.

CBS revenue rose 3 percent to $3.4 billion, as its recent acquisition of Internet media company CNET offset some of the decline in advertising revenue in its traditional TV and radio businesses.

The downturn comes as CBS is enjoying a better start to the 2008-09 prime-time television season than rivals Fox, owned by News Corp , ABC, owned by Walt Disney , and NBC, majority-owned by General Electric Co .

CBS currently leads the ratings race both for overall viewership in prime time and among the young adult audience that advertisers crave.

Over the summer months, however, CBS' TV ratings suffered due to competition from NBC's broadcast of the Beijing Olympic Games. Its television advertising suffered too, dropping 14 percent in the third quarter. Overall, the TV division posted a 2 percent rise in revenue for the quarter.

Sticking with recent trends, its radio division was a key weak spot, with revenue down 12 percent in the third quarter. CBS is selling some of its radio stations, but Moonves declined to set a timetable, citing the credit crisis.

Revenue at its Simon & Schuster publishing division rose 5 percent, while revenue at its interactive division jumped to $140.7 million from $35.9 million, thanks to CNET.

(Reporting by Paul Thomasch; Editing by Steve Orlofsky and Brian Moss)