CBS Corp. (NYSE: CBS) CEO Les Moonves received a contract extension that will keep him at the top of the Sumner Redstone controlled media firm for another five years. The announcement that Moonves’s contract had been extended to 2017, is a testament to his success, to some extent because Redstone, the executive chairman of CBS, has had no qualms about firing the chief executives at the other company he controls — Viacom (NASDAQ: VIAB).
Moonves got the extension for what was almost certainly a good reason. He has steered the TV company through a period in which many large media firms have been nearly destroyed by the rise of the Internet. Over the past five years, CBS shares are higher by 20% while the S&P 500 has been slightly down. By contrast, Time Warner (NYSE: TWX), which is considered one of the most well-diversified large media companies, has had a 20% fall-off in share value during the same period. And the rise in CBS shares do not include its healthy dividend, which represents a current yield of 1.4%.
Results of the June quarter indicate how tightly CBS is run. Revenue fell slightly from $3.59 billion in the second quarter of 2011 to $3.48 billion. But net income rose from $395 million to $427 million. CBS showed the wisdom of how it has balanced it business units. While network revenue dropped $1.84 billion in the second quarter of last year to $1.71 billion in the most recent quarter, both local station and cable revenue rose, as did the operating income of each.
The primary accolade mentioned when CBS announced the extension was Moonves’s record in the television ratings race — a game in which networks usually trade places on a regular basis as popular shows come and go. But, “Moonves came to CBS in 1995 as President of Entertainment. He and his team proceeded to take the Network from last to first place in the ratings, where it has remained #1 for nine out of the last ten years,” the company said. The math may be a bit confusing or even off, but the trend is extraordinary.
Douglas A. McIntyre