CBS Posts Loss Of $156 Million For 4th Period --- Network Cites Ad Climate, Losses on Baseball Pact; Dividend Is Slashed 77%
NEW YORK -- CBS Inc., buffeted by a damaging slowdown in advertising and a big deficit on its billion-dollar baseball contract, posted a huge loss for the fourth quarter. Bracing for an even tougher year ahead, the company also slashed its quarterly dividend by 77%.</br></br>CBS's loss of $156 million, or $6.06 a share, caused by an aftertax charge of $170 million on its four-year baseball pact, was the largest quarterly loss in the company's history. In the year-earlier period, CBS had net income of $59.5 million, or $2.31 a share. Sales in the quarter rose 6.2% to $919.7 million from $865.8 million.</br></br>Even without the baseball write-down, CBS said its network had an operating loss in the quarter and will have an operating loss in 1991 that some analysts peg at $125 million. Moreover, the broadcast company's troubles are likely to be further aggravated in the first half by high costs of covering the Persian Gulf war and by ad pullouts on the part of sponsors that don't want to air commercials during war news. The pullouts come on top of already-sluggish ad sales in the current recession.</br></br>But CBS no longer will be able to offset the downturn with huge interest income, which has provided a large chunk of company earnings in the past two years. Interest income will plunge this year because the company's cash position was reduced by 70% when CBS spent $2 billion earlier this month to buy back almost half of all its common shares outstanding.</br></br>CBS Chairman Laurence A. Tisch said that the Persian Gulf war and the recession are "suppressing" CBS's sales and earnings. The company said profits fell and sales were flat at CBS's television stations and radio operations in the quarter. The outlook for all local TV and radio stations is bleak in the current advertising slump and recession.