NBC's windfall on the Olympics is turning intoa downfall for other TV networks.
On Thursday, CBS Corp. Chief Executive Les Moonves became the third major mediacompany executive in three days to acknowledge that the London Olympics weresucking the oxygen out of the advertising market.
Executives at CBS, Time Warner Inc. and Discovery Communications Inc. all saidthis week that the so-called "scatter" market for last-minute ad buyswas experiencing softness. They said advertisers were spending more of theirmoney on commercials for the Olympics, which have been more popular thanforecast.
NBC owner Comcast Corp. said Wednesday that it now expects the Olympics to bebreak-even, or possibly profitable, because of bigger-than-expected audiences.Earlier, it thought the Games would lose $200 million.
Rivals expected the dollars to flow back to their networks after the Games arefinished.
"In terms of any softness, I think it's all attributable to the Olympics,"Moonves said during a conference call following the release of company'ssecond-quarter earnings results. "It's something that is totally fine,totally business as usual."
Moonves said the market will return to normal in September, when the fall TVseason begins and CBS starts to benefit from higher commercial prices that itlocked in during the bulk sales period known as the upfronts earlier this year.He also expects political ad sales to break records ahead of the presidentialelection in November.
"We're ready for the gun to go off in the middle of September," hesaid.
The CBS executive's comments come a day after Time Warner Chief FinancialOfficer John Martin told analysts that demand for last-minute commercial buyson networks such as TNT and TBS was "a little slow right now, and that'sdue to money being diverted to the Summer Olympics."
Discovery CEO David Zaslav said Tuesday that the strength of the Olympics wasone of the "hurdles" to overcome for its channels such as Discoveryand TLC in the third quarter.
Demand for ads is a concern because the market has been slowing down lately.
For the April-June period, CBS said its advertising revenue fell 3 percent,compared to a 5 percent gain in the January-March quarter. Ad revenue at TimeWarner networks rose 2 percent in the quarter, compared to 6 percent in theprevious quarter. Discovery's U.S. ad revenue was up 7 percent, compared to a13 percent gain a quarter earlier.
"I think the question is, 'Is the ad market softening?" said RobinDietrich, an analyst with Edward Jones. "The economic news as of late hasnot been all that favorable."
Despite the lukewarm outlook, CBS reported that its net income rose 8 percentin the most recent quarter through June, beating analysts' expectations, eventhough revenue fell, primarily because of timing issues.
CBS was unable to match last year's second quarter revenue performance becausein 2011 it received a large bump from a TV licensing deal with Netflix. Lastyear also saw the semifinals of the March Madness NCAA college basketballtournament occur during the April-June quarter.
Net income in the three months to June 30 rose to $427 million, or 65 cents pershare. That handily beat the 59 cents per share expected by analysts polled byFactSet.
Revenue slipped 3 percent to $3.48 billion, below the $3.53 billion expected.
Advertising revenue fell 3 percent to $2.14 billion while rerun sales fell 8percent to $816 million. Fees from TV distributors who pay to carry the CBSnetwork and its Showtime channel rose 8 percent to $465 million.
Overall, the company said advertising revenue in the second quarter reflected a"steady marketplace."
Profits went up despite the revenue fall partly because fees from distributorsare more profitable than ad sales. The shift of some college basketball gamesinto the first quarter also reduced programming costs in the second quarter.
CBS' stock rose 26 cents in after-hours trading to $33.30. In the last year, ithas traded in a range of $17.99 to $35.