CBS Strikes Out With Sports, Posts $156-Million Loss

CBS Inc., reeling from costly sports contracts and a soft advertising economy, reported Wednesday that it lost a staggering $156 million during the fourth quarter. The company also announced that it slashed its quarterly dividend 77% to 25 cents per share.

The loss comes at a time CBS has lagged embarrassingly behind the other networks with its Persian Gulf War coverage and is trying to halt eroding prime-time ratings.

Analysts expect the network to suffer another huge loss in the first quarter and see no turnaround until 1992 at the earliest.

For the three months ended Dec. 31, revenue rose 6.2% to $919.7 million. But the network incurred a $55-million after-tax loss from major league baseball broadcasts during the quarter. In addition, the company took a $115-million charge against earnings in the quarter for baseball losses during the remaining three years of the contract.

For the year, CBS earned $110.8 million, down 63% from $296.3 million a year earlier. Revenue rose 10% to $3.26 billion from $2.96 billion in 1989.

Lisbeth Barron, vice president at the investment firm S. G. Warburg & Co. in New York, said the network lost $240 million before baseball-related losses and writeoffs were included.

“This was kind of a non-event,” said Barron. “We knew there was a dividend cut coming, and the sports losses were in line with what was expected.”

The only bright spots at CBS appeared to be the network’s group of five owned television stations and the radio division. The company said both divisions posted record profits for the year.

To some extent, CBS shares problems with the rest of the broadcasting industry, which is being hurt by weak demand for network advertising because of the recession and the growth of alternatives such as cable television.

CBS Inc. Chairman Laurence A. Tisch said the increased supply in advertising time available on new cable TV channels and Fox’s fourth network, in tandem with the recession, forced the network to cut its ad rates and “flattened the industry’s revenue growth.”

Furthermore, Tisch said, the CBS Television Network is expected to lose money this year. Those losses will widen as the Gulf War leads to increased news costs and lower advertising.

“The network’s results are going to continue to be pretty disappointing on a short-term basis,” said Peter Appert, a media analyst with the C. J. Lawrence investment firm in New York. “What was a soft fourth quarter has turned out to be a disastrous first quarter.”

Another factor depressing CBS’ earnings this year will be sharply reduced interest income from the company’s $2.8-billion cash reserves, which last year earned $152.2 million. This month, CBS spent $2 billion to repurchase 44% of its stock, leaving the company with $800 million in cash.