CBS Q1 2010 Earnings Call Transcript

CBS Q1 2010 Earnings Call Transcript
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CBS (CBS)

Q1 2010 Earnings Call

May 05, 2010 4:30 pm ET

Executives

Leslie Moonves - Chief Executive Officer, President and Director

Sumner Redstone - Founder and Executive Chairman

Joseph Ianniello - Chief Financial Officer and Executive Vice President

Adam Townsend - Executive Vice President of Investor Relations

Analysts

Brian Shipman - Jefferies & Company, Inc.

James Goss - Barrington Research Associates, Inc.

Douglas Mitchelson - Deutsche Bank AG

Jessica Reif-Cohen - BofA Merrill Lynch

Alan Gould - Soleil Securities Group, Inc.

Michael Meltz - JP Morgan Chase & Co

Benjamin Swinburne - Morgan Stanley

Laura Martin - Needham & Company, LLC

Anthony DiClemente - Barclays Capital

Marci Ryvicker - Wells Fargo Securities, LLC

James Dix - Wedbush Securities Inc.

Presentation

Operator

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Good day, everyone, and welcome to the CBS Corporation First Quarter 2010 Earnings Conference Call. At this time, I'd like to turn the call over to the Executive Vice President of Investor Relations, Mr. Adam Townsend. Please go ahead, sir.

Adam Townsend

Good afternoon, everyone, and welcome to our First Quarter 2010 Earnings Call. Joining me for today's discussion are Sumner Redstone, our Executive Chairman; Leslie Moonves, President and CEO; and Joe Ianniello, Executive Vice President and CFO. Sumner will have opening remarks, and we'll then turn the call over to Les and Joe who will discuss the strategic and financial results. We'll then open the call up to questions.

Let me note that statements on this conference call relating to matters which are not historical facts are forward-looking statements which involve risks and uncertainties that could cause actual results to differ. Risks and uncertainties are disclosed in CBS Corporation's news releases and securities filings.

A webcast of this call and the earnings release related to today's presentation can be found on the Investor Relations section of our website at cbscorporation.com. Reconciliations for non-GAAP financial information related to this call can be found in our earnings release, our full year Form 10-K or on our website.

With that, it’s now my pleasure to turn the call over to Sumner.

Sumner Redstone

Thank you, Adam. Good afternoon, everyone, and I thank you for being with us today. What a difference a year makes as we look back on a truly great quarter. It's really gratifying to see the rewards of all the hard work put in by Les and his management team.

Even in the most challenging times, we've never wavered in our focus. We reduced expenses, we strengthened our balance sheet, we invested in premium content and we maintained our leading position in local TV and radio. In good times and in bad, we've kept to our long-term strategy of serving growth and shareholder value. As a result, no company today is poised to benefit from the improving economy more than we are.

The CBS television network continues its reign at number one. CBS Studio shows have thrived within global syndication. Premium cable continues to grow. We are ideally positioned in the largest local markets as they rebound, and we built a leading global presence on the internet as well.

Without a doubt, CBS is built for long-term success. The results we're reporting today are not only a sign of momentum but a preview of the kind of success that I believe, that I know, CBS will have for many, many years to come.

And now, I would like to turn the call over to my very good friend and my colleague, CBS's President and CEO, the incomparable, Leslie Moonves.

Leslie Moonves

Thank you, Sumner, very much, and good afternoon to everybody. Thank you for joining us today. As you can see from our numbers today, we've just finished an extraordinary quarter. We're off to a terrific start this year, and the momentum reflected in these first quarter results is continuing right into the second quarter and beyond. Obviously, we are in a much better operating environment.

In addition to that, we are now seeing the results of many significant steps we have taken to position CBS for success not just this year but for many years to come. With proper cost cutting and by establishing consistent new revenue streams, the future is indeed bright, and as the strong ad market continues to shine, our results are very satisfying.

Today, I'm going to briefly review our results and some operating highlights of the first quarter, as well as discuss what we're seeing in the second quarter and into the future. Then, I'll turn it over to Joe to offer some more details on our financial results and balance sheet. Then as always, we'll be happy to take your questions.

Beginning with our very strong first quarter results, revenues of $3.5 billion were up 12% from the same quarter last year. This is our first double-digit year-over-year revenue increase since we became a stand-alone company at the end of 2005, and it represents strength in our biggest businesses across the organization. Our adjusted OIBDA of $351 million was up 40% year-over-year, and our adjusted operating income of $211 million was up 94%.

As you know, we've spent the past two years reducing our cost structure across the entire company, and we now have the operating leverage to show for it. We've expanded our margin so we can build on that progress going forward. At the same time, we generated $660 million in free cash flow during the first quarter, more than triple the amount for the same period last year, and we continue to take steps to fortify our already-strong financial position. We have reduced our debt and taken advantage of favorable markets to refinance near-term debt at favorable terms. More on that later from Joe.

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