CBS Earnings Surge 50% On Improved Ad Market

Media company announces it wants to do a $1.5 billion stock buyback

Wall Street loves the eye network and the hundreds of radio and TV stations that fall under the CBS banner.

On Thursday, CBS announced that third-quarter profits were up more than 50 percent. However, revenue for the company was down from the same period a year ago.

The company announced it had made $317.3 billion, or 46 cents per diluted share, compared with earnings of $207.6 million, or 30 cents per diluted share, in 2009.

That beat Wall Street's expectations. Analysts had been estimating earning of of 31 cents a share.

CBS executives said that the rosier fiscal picture was attributable to cuts in spending and a more robust advertising market.

“We are benefiting greatly from our return of advertising to historical levels,” CBS Chief Executive Officer Leslie Moonves said on an earnings conference call.

The markets responded positively to the report. The stock added 12 cents in extended trading after finishing the regular session at $17.66.

Overall, the company slashed costs over 8 percent to $2.67 billion from $2.93 billion.

That was critical because revenue from the entertainment segment was down 12 percent. CBS said the drop-off to $1.62 billion from $1.83 billion occurred because in the 2009 period the network signed lucrative syndication deals for five of its series.

But ad revenue rebounded from its post-recessionary lows. Revenue from ads on the networks radio and television stations was up a hefty 25 percent.

Another boon for CBS balance sheet has been the money it takes in for retransmission fees. Affiliate and subscription revenue expanded 15 percent during the period.

The company also announced it plans to buy back $1.5 billion of its shares.

"We felt to reduce our shares was the right way to go with this amount of cash. This does not preclude us to do something further with the dividend," Moonves said on the earnings call.