CBS' Moonves Not as Upfront About the Upfront

(MoneyWatch)  All you need to know about the network TV business in this economy is the following: being far and away the top-rated network gets you a six percent decline in fourth quarter revenue and a 46 percent decline in operating income. That's what CBS (owner of BNET), which broadcasts 11 of the top 20 TV series, reported this morning. For the year, revenue was down one percent, and operating income before depreciation and amortization was down 17 percent. CBS and its competitors are probably glad to put the fourth quarter behind them, but the future looks increasingly unclear.

TV ad revenue, which includes local stations, dropped eight percent for the quarter; radio, 18 percent; and outdoor, 15 percent. CEO Les Moonves, at left, said in a conference call this morning that prices in the so-called scatter market (the inventory that networks hold back from selling until closer to airtime) were up compared to prices in the upfront market, where advertisers buy in the spring and early summer for the fall TV season, but that sales volume in the scatter market is down. No surprises there -- but what does this mean for next season's upfront? A transcript of the earnings call shows Moonves isn't saying much -- and saying even less than he did very recently.

In fact, when analyst David Miller of Caris & Co. asked for more specifics surrounding Moonves' comment that the second half would be better than the first, Moonves, given a chance to posit improvements in the ad market, couldn't quite get himself to say the "a" word. As recently as early January, he was predicting that CBS would see price increases in the coming upfront. Today, however, he said this:

Number one we have the five syndication titles that I talked about [that are entering the syndication market]. That is the primary factor that are not there in the first half that will be there in the second half. In addition there have been some cost cutting things that will take effect in the second half of the year. Number three, we expect the network to continue to be as strong as it is and we are now in the dominant position which we hadn't been and we expect to get the lion's share of that revenue. We think that will be effective as well.

The company's big bet in the near-term is building alternative revenue streams. Moonves has been working quickly to do so, saying on this morning's call that non-advertising revenue now makes up a third of its business. In addition to selling series in syndication, CBS is also charging retransmission fees for CBS programming that is distributed through new channels, and so far has signed deals with Time Warner Cable, Dish Network and Verizon.