Despite Earnings Gains, CBS Stock Drops

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CBS Corp. last week reported that earnings quadrupled
during the second quarter, despite estimates that its broadcast network lost $30 million
for the period.

Cable networks The Nashville Network and Country Music
Television, however, were a bright spot for the company, as revenues and cash flow both
rose sharply.

For the quarter ended June 30, profits totaled $4 million,
or 1 cent per share, up from $1 million, or a loss of 2 cents per share, for the
comparable period a year ago.

Revenues for the period totaled $1.4 billion, up 16 percent
over the like period in 1997, while pretax cash flow stood at $275 million, a 22 percent
jump and the highest of any quarter in CBS's history, company officials said.

But despite the improved performance, some analysts
complained about the company's decision not to detail individual results for its
television stations, CBS Network and CBS Cable units.

Instead, CBS lumped the three under a single heading in its
latest earnings report, making it difficult to determine how its broadcast network was
performing.

But the earnings still failed to meet Wall Street
expectations. Traders sent CBS stock tumbling $2 a share to $31.69 in trading on the New
York Stock Exchange on Wednesday.

CBS officials defended the new reporting method, noting
that none of the other major networks break out their individual business units, and
insisting that it represents a more "truthful" way of viewing the overall
industry.

"We believe this earnings report reflects the reality
of the business," said CBS spokesman Gil Schwartz. "The network, the television
stations and cable exist inside the organization, but they depend on and affect each
other."

Some industry observers were not convinced.

"They're trying to say 'the network
isn't all that we're doing,'" said one media analyst. "[But]
looking at it as an analyst, I don't like it. It is full disclosure. But it sure
makes it hard to get at everything."

CBS did report that revenues for its television segment,
which accounted for over $1 billion of the quarter's $1.48 billion in sales, were up
14 percent, while cash flow jumped 33 percent to $133 million. Revenues and cash flow from
cable operations, driven by TNN and CMT, which were acquired last year, were up 13 percent
and 28 percent, respectively.

Total revenues for the first six months of the year were
$3.4 billion, up 31.6 percent from $2.6 billion for the like period in 1997, while cash
flow totaled $317 million, up 72 percent.

Earnings for the six months were $23 million, or 3 cents
per share, compared with a loss of $102 million, or 21 cents per share, a year ago.

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