13% Decline in TV Advertising Revenue in 2008 Contributes to CBS Loss of US$11.8 billion

Broadcasting and Cable‘s Claire Atkinson reports today on CBS Corp’s announcement of $11.8 billion loss for 2008, and 52% fall in net income.

Not all of the loss is due to downturn in TV advertising revenue, although all ad-supported areas of the Corp’s business are down: outdoor by 75% and radio by 56% in the fourth quarter of 2008. According to B&C, two thirds of CBS’s revenue is derived from advertising.

Hurt by local advertiser pull backs in radio and outdoor and a challenged national TV ad market, CBS Corp. said operating income at the television segment was down 40% in the fourth quarter, at $272.2 million down from $450.5 million in the year previous and for the full year down 14% to $1.5 billion in 2008. CBS had broadcast the Super Bowl in the year previous. TV segment revenue was down 8% for the fourth quarter at $2.2 billion and down one percent for the full year at $8.99 billion.

There may be further bad news ahead for the TV network, despite good ratings for TV shows

Ironically, CBS ratings success may be something of a burden. CBS doesn’t have make-goods and its high ratings give its sales team many more ratings points to sell than its competitors. In some instances scarcity of ad inventory creates higher pricing. Analysts have noted that the network may have difficulty selling all those additional eyeballs in a down ad market. Also, CBS traditionally holds back more inventory for the year round scatter market, rather than selling it upfront, banking on its strong programming slate to bring in usually higher scatter pricing.

But one bright light on the horizon is… ONLINE VIDEO and INTERACTIVE SERVICES!

[CBS Corp CEO Leslie] Moonves praised TV.com [CBS’s online video portal] and said it had added thousands of videos and was delivering five times the number of a streams as last year. “TV.com is clearly going to be a very, very big play in what is clearly a fast growing market.” The CBS Interactive unit saw a jump in revenue for the fourth quarter to $186 million reflecting the acquisition of CNET along with higher mobile revenue and higher ad sales.

Although TV.com/CBS are currently in dispute with NBC and News Corp owned Hulu.com, with the latter removing programming from the former.

Hulu, which launched in beta in October 2007 and publicly in March 2008, has been a runaway success for its backers, even garnering some high profile Super Bowl promotion. But TV.com, relaunched by CBS in January, is also growing and offering up some increased competition for viewers that wish to stream their favorite shows online. According to a Mediapost story today, TV.com recorded a 1,261% increase in streams for January and a 263% increase in unique viewers in January, according to Nielsen VideoCensus data.


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