And Another One: CBS Cuts Outlook, Plans Huge Writedown

Joe Weisenthal | October 10, 2008 3:22 PM

les-moonves.jpgFollowing the lead of its old sibling Viacom, CBS has just come out with an earnings warning of its own. Blaming the ugly local ad market and the economic crisis, the company says quarterly earnings will come in at $.42-$.44, compared to $.51 in the year ago quarter. Unlike Viacom, the company doesn't have much to offset the horrible ad market -- no hot videogame, no a-cylical film business.

And with the bottom dropping out of the local business, the company is facing another issue: "Based on preliminary results, the Company expects to incur a non-cash impairment charge of approximately $14 Billion, in the third quarter of 2008 to reduce the carrying value of goodwill, intangible assets related to FCC licenses and investments."

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8 Comments

CV said:
There's been speculation that Time Warner would consider buying NBC, but I wonder if CBS continues to struggle if it would be an acquistion target for TWX instead.
Conventional wisdom, prior to the meltdown, was that TWX didn't want a broadcast asset - it wanted more cable. And CBS doesn't have much to offer there.
Clyde McPhat said:
Do you think Leslie is regretting the money he paid for CNET? I would hope so....what tea leaves was he reading when he made that purchase?
He can still argue, with a straight face, that CNET will work out because even though digital ad growth rate will shrink, it will still do better than broadcast TV.

If you want to argue that he should have spent his money on businesses that didn't increase his exposure to the ad market, that's one thing. But what should he have done with that money?

Clyde McPhat said:
I have the benefit of 20/20 hindsight but keeping the money in the pocket at the present time is probably the best strategy. Somewhere on the site today,I think I read about News Corp having about 6 billion in cash on hand now and expecting 9 billion by the end of the fiscal year. Peter, I was suggesting in my intial post that Les had severly overpayed for CNET, and that the money for the ad marketplace on line is diffused and even the best of sites can only bring in a pittance of what they are getting in search. Also, with the economy slowing down and the consumer gadget marketplace sinking, the popularity of CNET will not grow as they once thought it would. Too be honest with you, the ad marketplace is probably going to be in the worst shape it has ever been in since they banned cig adverts in the '70's. But if you think Les has it bad, how about his former playmate, Mel? Mel is getting crushed from three fronts. Sat radio is surely NOT an entertainment neccesity, there is NO ad market for it, and they ain't exactly selling a lot of cars with the product in them.
Agree with all of that Clyde. And yes, one of the few moguls in worse shape than Les is Mel. Astonishing how many dollars, and how much ink/pixels, have been spent on satellite.
CV said:
For the amount of money Yahoo is thinking of paying for AOL, Yahoo should consider buying CBS instead if CBS' stock continues to decline. Yes CBS is a slow-growth company, but it's profitable and pretty good at generating cash. In addition, Yahoo could make better use of CNET then CBS.
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