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CBS Realizes Changing Times After Recent Quarterly Declines

More and more companies throughout the world are shifting the way they traditionally do business in order to become more digital and Internet based. Advertising and marketing have become easier through the Internet as businesses can now reach millions of people daily.

Yesterday CBS Corp. (NYSE: CBS), the media group that runs the most popular U.S. TV network, reported a sharp decline in its quarterly net earnings from a year ago. Second quarter net earnings of $404 million were down dramatically compared to last year’s second quarter earnings of $781.7 million, which is down 48 percent.

Although profits from continuing operations, excluding divestures and other adjustments, rose 9 percent to $393.1 million, overall revenue fell by 3 percent to $3.4 billion. This drop was caused by the company’s poor radio results and advertising.

To offset this declining number, CBS has targeted a new strategy which shown great strength for the company over the past year.

In a sign of the shifting media landscape, CBS sold 39 radio stations and 10 television stations in smaller markets over the past year. Meanwhile, it has acquired digital media properties, most recently spending $280 million to acquire, in an effort to distribute its programming content to online viewers as reported in a statement.

This shift to the Internet for digital media properties is picking up speed. More and more companies are selling its outdated technologies and changing to the more digital arena to become cost competitive and appeal to the larger markets. As TV is being broadcast live over the Internet and Radio is being broadcasted live over the Internet, CBS needs to make up lost ground in order to catch up to this new technology.

Earlier in the quarter, CBS joined a group of five media companies, including Viacom (NYSE: VIA), to invest $45 million in Joost, a company attempting to broadcast television over the Internet. Market News First, has been streaming live television broadcasts on the Internet for over a year now, and it is obvious that other companies are catching on to this phenomenon and seeing it as the wave of the future.

Losses might continue for companies in the radio broadcast and television businesses in the near future if they don’t catch up to what is happening. The advertising generated, and potential target audience for these media companies is too great to let slip away.

CBS is on the right track, but as you can see from the declining profits that an adjustment is needed. CBS is making headway by being one of the first to shift its strategy. The revolution is upon us, and one day as technology moves everything to wireless; media forums will primarily be conducted through the World Wide Web on a mobile device.

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