CBS Results Downbeat, DVR Payment Hopes Upbeat

06 November 2006

NEW YORK: Despite delivering Q3 results down 44.7% on the year-ago period - or perhaps because of it - CBS Corporation ceo Leslie Moonves proclaimed his optimism that broadcasters will soon be paid for viewers who watch commercials via digital video recorders

In a conference call to analysts last week, Moonves pinned his hopes (and possibly his job, remembering the recent fate of Viacom ex-colleague Tom Freston) on persuading advertisers and agencies to stump-up for DVR viewers.

In December Nielsen Media Research will start to release its upgraded commercial ratings system, making it possible to gauge audiences for individual ads irrespective of whether they are watched 'live' or on DVRs and similar devices.

There is a general expectation within the industry that this will lead to ad payment being based on the total number of viewers delivered for each commercial.

Moonves told analysts: "In terms of DVRs, we think it is inevitable that they're going to have to start counting DVR usage as part of ratings, and I think everybody in the world - even the advertising community - is acknowledging that this year they were able to exclude it."

Crossing his fingers, Moonves continued: "But next year there is no way that's going to happen. So once again, we think as technology advances, as Nielsen advances, as recording advances, the strong broadcast networks are going to be even stronger."

However, Merrill Lynch's resident pin-stabber Jessica Reif Cohen was as unimpressed by Moonves' aspirations as she was by CBS' performance during the quarter.

In an investment report written after the conference call, she noted: "Advertising revenues fell 3%, which was worse than our expectation of 1% growth.

"Even accounting for the impact of declining UPN revenue," Cohen continued, "this suggests advertising revenue at CBS Network fell close to 2% in the quarter (assuming revenue growth at the stations of low single digits)."

  • CBS reported net profits of $317 million (€249.5m; £166.7m), down year-on-year from $708.5 million. Total revenue was as flat as a pool table: $3.378 billion versus $3.372bn in Q3 2005.

    Data sourced from AdAge (USA); additional content by WARC staff