Broadcasting giant CBS Corp. said Tuesday that its second-quarter profit surged thanks to a rebound in local advertising spending, which is climbing back toward normal levels as the recession fades.
CBS's net income was nearly 10 times the level a year ago as cost-cutting helped profit and revenue rose 11 percent. The earnings beat expectations and shares were up 3.3 percent in after-hours trading.
The resurgence in ad spending was across the board, led by the automobile, telecommunications, retail, financial services and entertainment sectors. Local ad spending, which makes up about a fifth of CBS's revenue, rose 17 percent from a year ago.
"The second quarter's local TV ad growth is continuing well into third," Chief Executive Les Moonves told investors on a conference call. "We do not foresee a slowdown."
Even as it reaps more money from the resale of programs its produces, such as "NCIS: Los Angeles," nearly two-thirds of the company's revenue still comes from advertising. It owns 28 TV stations and operates 130 radio stations nationwide, making the company a barometer of how much other companies are spending to promote their products.
Last year, local ad markets were on the mend after auto spending hit rock bottom at the beginning of 2009.
This year, the company was able to sell more ads in advance of its fall TV season than a year ago, selling out 80 percent of its inventory versus 65 percent last year, and at higher prices.
"We still have lots of room to grow," said Chief Financial Officer Joseph Ianniello, noting that political campaign spending will boost revenue in the fourth quarter ahead of the November elections.
Net income in the three months to June 30 hit $150.1 million, or 22 cents per share, up from $15.4 million, or 2 cents per share, a year ago.
Revenue rose to $3.33 billion from $3.01 billion.
Adjusted for one-time items, net income hit 25 cents per share.
That beat the expectations of analysts who were looking for adjusted earnings of 21 cents per share on revenue of $3.24 billion.
Local advertising revenue gains helped lift total ad sales by 9 percent.
Revenue at its largest segment, which contains the CBS television network, its TV studio, fledgling film studio and online group including CNET, grew 10 percent to $1.67 billion. The tally was boosted by licensing and distribution of such shows as the "CSI" franchise, "NCIS: Los Angeles" and "The Good Wife."
Cable network revenue, including that from pay TV channel Showtime, grew 12 percent to $369 million.
Its Simon & Schuster book division grew 5 percent to $190 million, helped by titles such as Laura Bush's "Spoken from the Heart."
Local broadcasting revenue rose 17 percent to $678 million. TV station revenue surged 31 percent, while radio sales grew 6 percent.
Outdoor ad revenue from billboards rose 5 percent to $456 million.
The company also touted a 10-year deal with cable operator Comcast Corp. announced Monday in which it locked in gradually rising fees for its CBS signal as well as a deal encompassing Showtime Networks and the CBS College Sports channel.
Fees paid by Comcast and other cable and satellite companies for CBS's broadcast signal, known as retransmission fees, are a growing part of CBS's revenues. It expects to record $250 million in retransmission fees for the full year in 2012.
CBS also recently cut a 14-year, $10.8 billion television package with Time Warner Inc.'s Turner Broadcasting to share the costs of carrying the NCAA March Madness college basketball tournament, which Moonves called a "huge improvement" from previous deals and would make the tournament profitable right away.
Shares rose 49 cents, or 3.3 percent, to $15.50 in after-hours trading after losing 29 cents, or 1.9 percent, to close at $15.01 in the regular session Tuesday.
© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.