CBS Corp.’s earnings growth accelerated during the fourth-quarter as advertisers spent more broadcasting their commercials during last year’s U.S. political campaigns and holiday shopping season.
The results released Wednesday provided the latest sign that advertisers are increasing their television and radio marketing budgets as they feel more confident about the U.S. economy’s recovery from the Great Recession. Advertising also has been rising in most other media but newspapers.
CBS, based in New York, serves as a barometer of advertising sentiment because it runs the top-rated television network and owns 28 local TV stations and 130 radio stations.
The company’s total ad revenue during the final three months of 2010 rose 12% from the prior year, with the biggest gains coming at its local TV stations. Political spending heading into the early November election drove the growth early in the quarter and then CBS got a boost from a marketing blitz in the best holiday shopping season in four years.
Although management didn’t provide a specific earnings forecast, executives said they expected profit margins to widen this year and next. “We expect great things this year and beyond,” CEO Leslie Moonves said.
CBS earned $283 million, or 41 cents per share, in the quarter, compared with profit of $59 million, or 9 cents per share, at the same time in 2009. The 2009 results included $200 million in charges that depressed the bottom line.
If not for one-time items in the latest quarter, CBS said it would have earned 46 cents per share. That figure topped the average estimate of 43 cents per share among analysts polled by FactSet.
Revenue for the period rose 11% from the prior year to $3.9 billion, slightly above analyst estimates. Revenue in the 2009 fourth quarter was $3.5 billion.
Besides benefiting from an advertising revival, CBS also raked in higher licensing fees for its shows. Those fees climbed 29% in the fourth quarter, with the biggest chunk coming from the syndication rights to the series CSI: Crime Scene Investigation.
CBS’s cable division, Showtime Networks, also fared well with a 6% revenue increase. The cable networks ended the year with 67.1 million subscribers, up 5.8 million from 2009.
Although management sounded bullish about the current quarter, executives cautioned that comparisons to last year will be difficult because CBS broadcast the Super Bowl in the 2010 period. News Corp.’s Fox television network held the rights to television’s biggest event this year.
CBS’s publishing division also could be hurt by the downfall of the Borders book chain, which filed for Chapter 11 bankruptcy protection. Executives declined to quantify the company’s exposure in a Wednesday conference call, but said CBS had stopped shipping books to Borders late last year in anticipation of a possible bankruptcy filing.
For the full year, CBS earned $724.2 million, or $1.04 per share, on revenue of $14.1 billion. That was up from net income of $226.5 million, or 33 cents a share, on revenue of $13 billion in 2009.
