Good day, everyone and welcome to the CBS Corporation first quarter 2007 earnings release teleconference. Today's call is being recorded. At this time I would like to turn the call over to the Executive Vice President of Investor Relations, Mr. Marty Shea.

Good morning, everyone. Thank you for taking the time to join us for our first quarter 2007 earnings call. Joining me for today's discussion are Sumner Redstone, our Executive Chairman; Leslie Moonves, our President and CEO; and Fred Reynolds, Executive Vice President and CFO. Sumner will have opening remarks and then we'll turn the call over to Les and Fred for strategic and financial issues. We will then open the call 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 summary of the CBS Corporation's first-quarter 2007 results should have been sent to all of you. If you did not receive these results, please contact Punam Visay at 975-3667 and she will get it to you. A webcast of the call, the earnings release and other information related to this presentation can be found on CBS Corporation's corporate website at the address of cbscorporation.com. Now I will turn the call over to Sumner.

Thanks, Marty and good morning, everyone. Thank you for joining us. We now have five quarters of results from the CBS Corporation in the books. What is clear is that our traditional businesses are more than healthy. CBS continues to turn out superior professional content that attracts mass audiences and of course, we are highly aggressive, well ahead of the curve in the new interactive marketplace. By adapting our content for new platforms, forming strategic partnerships, investing in high-growth businesses, we have positioned CBS for the future; all the while we are generating strong free cash flow. We're making prudent adjustments to our asset portfolio, but most important, through dividends and our previously announced share repurchase transaction we're making good on our promise to consistently return value to investors. As our results this quarter demonstrate, Les and his management team are totally committed to being the very best at what they do. I have said this before: Les does everything right. He is a superb executive. As for me, I am more enthusiastic than ever about where this company stands today and where it is headed tomorrow. Now to tell you more about that is Les.

Thank you, Sumner and good morning, everybody. Once again, thank you for joining us. I'm really pleased with the results we are reporting today and with the direction of our entire company. This first quarter once again demonstrated the tremendous power of our industry-leading businesses. From some of the biggest events in broadcast television to new, innovative digital billboards to strong demand for Simon & Schuster's bestsellers, we are monetizing our unparalleled ability to attract mass audiences. Of course, our position is only strengthening as we extend our hit content into the burgeoning interactive landscape. This morning I am going to share some of CBS's financial highlights and then I'll tell you a bit of what is going across the company and at each of our individual businesses. Then I'll turn it over to Fred for more in-depth financial information. So let's get started with the first quarter results. Revenues of $3.7 billion were up 2.3% from prior year with growth at TV, outdoor and publishing. Free cash flow grew 17% over last year to a very healthy $753 million. Net earnings from continuing operations was up 8% from first quarter of '06 and earnings per share was up $0.02 to $0.33 adjusted for radio station sales. During the quarter we closed on radio station divestitures in Kansas City, Columbus, Fresno, and Greensboro and will close on the remaining markets in the months to come. We also returned significant value to shareholders during the quarter. As part of the share repurchase transaction announced at our last earnings call, we bought back approximately 47 million shares for more than $1.4 billion. If you include the 7.6 million shares we retired in connection with the sale of our Green Bay station to Liberty Media, we have reduced outstanding shares by 7% year-to-date,…

Thank you, Leslie and good morning. Let me add some additional information on our first quarter of 2007 to provide highlights of our operating performance, cash flow and balance sheet and to focus on our underlying performance in light of several large items which affected the comparability between our reported results in the first quarter of 2006 and the first quarter of 2007. So revenues for the first quarter totaled $3.7 billion, up 2.3% over last year. As you know, in the first quarter of 2007, we aired the Super Bowl and the NCAA Basketball Final Four games. Last year, as you may recall, the Final Four and the college championship game both were aired in the second quarter. The revenues from these two major sporting events partially offset the following items, which benefited revenues in the first quarter of 2006, but were not present in the first quarter of 2007. These non-comparable items were: the absence of syndication revenues from the licensing of the second cycle of Frasier, which we did in the first quarter of '06. Also, the loss of revenues due to the fact that we divested 39 radio stations. Then there was the absence of revenues from the UPN Network, which as you know, shut down operations in September of '06. Finally, as Leslie mentioned, the loss of revenues from the non-renewal of low margin transit and street furniture contracts in New York and Chicago. Taking into account the revenues from the Super Bowl, the NCAA Basketball Final Four games and these non-comparable items from both years, revenue growth in the first quarter of 2007 would have been up an additional couple of percentage points. Television, outdoor and Simon & Schuster led our revenue growth in the first quarter of this year with Simon & Schuster…

(Operator Instructions ) Your first question comes from Jessica Reif-Cohen - Merrill Lynch. Jessica Reif-Cohen - Merrill Lynch: I think you said that leverage at the end of the first quarter was 2.2 times, which is below your target leverage. Could you just talk about how you get to your target leverage? Your acquisitions so far seem to be very focused on high-growth online, but they have been relatively small. So could either of you discuss what kind of acquisitions you would consider? As a sideline to that, the efforts that you've made so far online and driving your programming online, what impact do you expect that to have ultimately on your ratings and when?

Let me deal with the general thing and, Fred, you can deal with the leverage. Obviously we are looking at online and this is a time of transition for us. While we are operating our businesses as effectively as we can, we have one eye on the future and what we're doing there. Revenues are growing substantially; however, we think that will continue and within a few years it will be a significant number on what we're doing in terms of revenue. Right now it is not. How large an acquisition? Right now we have been relatively minor in what we've purchased and what we've invested in. They are all things that have fit within our businesses. We're looking at all sorts of acquisitions that would in fact be with new media and content possibilities. But once again, nothing that would be earth shattering and nothing that would be substantial in terms of dollar amounts.

Clearly, we do not see an acquisition that is going to change our leverage ratio at this point. We look at a lot as Leslie said, we looked at over 140. We look everything that is out there but we are also very prudent on that. I guess I would say to you as we did this year, if we see that there is no use for this cash and it builds up, then we're going to return it to shareholders in a smart and efficient way. I have said before that we're at the low, low end of our leverage ratio and we keep producing tremendous amounts of free cash flow, which is a good thing. So far we have been pretty good at returning the excess cash to shareholders. As Leslie mentioned, about $1.6 billion in four months. That is the plan right now.

Your next question comes from Victor Miller - Bear Stearns. Victor Miller - Bear Stearns: Les, you mentioned obviously the controversy over the viewing currency that we might see this year, talked about DVR viewing. I don't think you talked too much about what we're seeing in out-of-home viewing increases. Maybe you want to mention a little of that. How does this all play out, in terms of you said the scatter market being good? How does it all play out in what your expectation is for the upfront this year? Secondly, obviously Clear Channel recently announced a deal with Google. News Corporate NBC announced a YouTube-like competitor. Could you just give us your comments on these industry moves and any other ones you think that are interesting? Thanks.

First of all, out of home, it is rather early to say but for the first time they are now starting to measure colleges, campuses and they're starting to mention sports bars. When you think of the NCAA Basketball Tournament where we never got any credit for a single person on a college campus, it is fairly substantial. The same thing with sports bars with our NFL as well as the NCAA Basketball Tournament and sports is an important part of our portfolio. We look at all these out-of-home measurements as a real positive for us and we think it should be strong. The upfront expectations, once again, with scatter market being at double-digits, that is usually a very good sign, an indication that more and more advertisers will come into the market at the upfront since if they waited for scatter, it would cost them a bit more. So we're looking at the upfront as being up. I'm not going to make predictions. I don't do it this early in the ballgame. We do expect it to be up. We are bullish about how we're looking at the upfront marketplace and every indication says it is going to be a strong upfront. I think we can look forward to that. In terms of what we have done with the new media, we applaud News Corp and NBC for doing what they did and everybody has a different strategy. We felt it was far better to set up our own network, which gave us the ability to (a) not be part of joint ventures, which are always difficult; and (b) take our content and not be exclusive to one place or the other. So we have formed a number of partnerships which we find the terms are very attractive to us and we think this strategy is going to work well for us. By the way, that is not ruling out that we may continue to do some business with the NBC and News Corp venture and put some of our product there as well. The great news about the way we have to go is the non-exclusivity, so we will have lots of partners and lots of ability to monetize our content.

Your next question comes from Lucas Binder - UBS. Lucas Binder - UBS : Fred, you mentioned that free cash flow, where we saw significant increase, you've been very effective in managing the working capital. Do you think there is still a lot more room for further tightening of accounts receivables and is there further working capital opportunity? With so many of the one-time items hitting the first quarter, when we look out to the second between the management and talent changes, between outdoor and radio, could you give us a sense of what some of those impacts will be on the second quarter?

On working capital, it was a big driver of our free cash flow as you can see from the statement of cash flows. There is still more to go. We are still not collecting as fast as we can. We keep driving down our days sales outstanding. It is a huge focus of all our divisions. It is a significant part of their short-term incentive to deliver cash flow and we are pretty aggressive. When Leslie sets the targets, they're not easy targets. So I would tell you, Lucas, I see this as not a one quarter phenomenon but this will continue to be an important part of our ability to get a faster asset turnover and turn assets into cash quicker. I do not see it ending anytime soon. On one-time items, as Leslie said and I tried to articulate, and Sumner mentioned it at the outset we're really transforming the company. So as you know, in the second quarter we will have a couple less TV stations. We'll probably close on a few more radio stations. So each quarter over this next year, there is going to be some non-comparable items, both good that benefit '07 and ones that benefited '06. I will try and we will all try and make sure that we highlight it like we did today, because we really want to look at, as we look at the business, the underlying performance when you strip out all the sort of ins and outs. Syndication in the fourth quarter will have a big syndication pop because of NCIS, which we own almost all the show. We will certainly highlight that so you see what is recurring underlying business and then the timing. So yes, I see more happening, more TV stations as we will close on the other nine will happen, more radio stations, and some of these one-time items. You referred to sort of the changes in talent at radio. At this point, we don't expect to see any detriment to our performance due to that, but again, it is still early. Hopefully that answers your question.

Your next question comes from Anthony DiClemente - Lehman Brothers. Anthony DiClemente - Lehman Brothers : You mentioned your strategy on the portfolio of assets. Just turning to outdoor, if the company can sell the outdoor division for $10 billion, which would basically put it in line with some other publicly traded multiples, why wouldn't you do that as a way to create shareholder value with your stock trading at less than 9 times? If you could elaborate on how outdoor fits in, clearly a highly coveted asset, but how does it fit in? What are the revenue and cost synergies at this point, and strategic synergies with the television broadcast network? Thank you.

We look at outdoor and synergies is not the operable question. It is, how is the outdoor business growing? As we get into digital, it becomes a more and more attractive business. When we look at a board like the Bay Bridge, where we have been able to just about triple revenues in the first month that it is an operation, it is a very exciting business for us. How does it fit with radio and television? We are primarily an advertising-based business. The idea of how the outdoor business is growing, the new clients that are coming in, how we look at progress, there is one client in fact that shall remain nameless, where we are going to have six or eight large digital boards throughout the country that they are going to operate from their own headquarters and constantly change the message and it's going to be a deal that will be north of $5 million for us. So when you look at it, the idea of selling outdoor is not attractive to us because we think it fits terrifically. It is an essential part of our portfolio. We love the growth potential of the business.

Your next question comes from John Klim - Credit Suisse. John Klim - Credit Suisse : Les, in your view has the value of certain types of programming increased or decreased as we have moved into an on-demand media world? If yes, what programming types have seen value increase or decrease? Thanks very much.

It is very interesting to look at who is getting the most DVR usage, which shows. Obviously as I mentioned before, it is the top shows. People are not recording the marginal shows. They're recording the best shows. What we have seen is when you put a Grey's Anatomy against a CSI, those are two of the most highly coveted shows because they are up against each other. We look at the universe now in a very different way than we used to, because now it is original, repeat, DVR usage, home video, DVDs, etc. and online. Obviously in terms of direct repeat performance, the procedurals do extremely well. They do better than the serialized dramas per se in terms of normal repeats. However on DVR usage, once again you are seeing the shows like Grey's Anatomy or Lost getting a lot of attention there as well. I think the good news is we're dealing in an era where it is going to be about measurements more than performance because once again, the audiences are still there. They're just getting their content in different ways and our job now, we are going to start getting paid for it in this upcoming season.

Your next question comes from Kathy Styponias - Prudential. Kathy Styponias - Prudential : Fred, I just actually want to confirm one thing that you said with respect to the network's performance. Did you say it was down 5% in prime time ex sports in the first quarter?

Yes, the CBS Network prime time schedule excluding sports was down, revenues down 5%. Kathy Styponias - Prudential : I think your ratings were down probably high single-digit, low double-digit ex sports during the first quarter. I just want to make sure that I am thinking about it the right way so as we progress to the second quarter and your ratings ex sports are down about 10% or so, if scatter trends are stronger now, we shall expect the revenue ex sports in prime time to improve? Is that correct?

Well, I'm not going to get into the second quarter but in the first quarter, that is true. We had very strong pricing, which offset some of the ratings decline, which is why you have the difference in net effect on revenues. I don't know if there is a lot of prime time sports other than the championship games in the second quarter.

That is correct.

I think that's the only one which would have been that Monday. So again, as Leslie said, scatter has been very attractive. It has been all year, all season, and we love high scatter prices. It's awesome. Kathy Styponias - Prudential : The second question I had was from a cash flow statement perspective. When do you actually pay the sports rights owners? When do you actually write the checks for the sports programming that has been showed? Does it occur in the same quarter typically or is it before or after with respect to NFL and NCAA?

The NFL is throughout the season. Super Bowl, that is a higher amount when you have a Super Bowl in that season. On the NCAA, it is pretty close, although I think, yes, it goes pretty much in the quarter, so we made payments in the first quarter and payments in the second quarter as the games sort of straddle both this year versus last year, they were all in one quarter. But it pretty much follows the quarter in which the event aired. Kathy Styponias - Prudential : So there was no benefit in this particular quarter as for the free cash flow was concerned from adding back the amortization for the sports rights, yet the check is not being written until some point later or earlier? There was no benefit from that?

Yes, I guess there could have been a slight one on the NCAA just because of the final four games, but we do have a big payment; I don't think it is significant one way or the other.

Your next question comes from Doug Mitchelson - Deutsche Bank. Doug Mitchelson - Deutsche Bank : Fred, the $21 million of revenue growth in home video was interesting. How big is that business annually either gross or net, if you can give us a ballpark on what kind of margin contribution this generates? Les, in all the talk about distributing TV shows, I have a question on VOD. Network cable is having a lot of success with an on-demand service called Start Over, as you know, where viewers can restart programs already in progress. The fast forward functionality is disabled, so commercials have to be watched. When I talk to the cable companies, many of them would love to have more of your prime time programming to offer on their video on demand service and they would be more than willing to disable the fast forward function there as well. I understand that you feel that you are going to start getting paid more for DVR viewing, but would it not be even better if the viewing was shifted to a DOD platform where you know ads are being watched? Secondly, to the extent you are in VOD discussions, can you tell us since they are already distributing your TV products pretty broadly online, what is holding you back from cutting VOD deals that include more of your prime time and day programming?

I will go first on the DVDs. Doug, we're not going to get into margins of DVDs because we don't break out that, but the DVD business is a high $300 million, $400 million a year revenue business. As you can see this year, it was growing, although a little bit unfair because we went to a third-party distribution last year. So there was a lagging effect last year by about a quarter by the time we got our payments. But we had nice growth, which we said we would. As we said last year, we thought the back half of the year, the DVD revenue would catch up and it sort of did and now we are on an equal keel. But it is a large, large business, high $300 million, $400 million in revenues and I'm not going to give you the margin. Doug Mitchelson - Deutsche Bank : So is that 20% type revenue growth that we saw in the first quarter sustainable?

Is it sustainable? Again, it is very title specific. I don't know if I can say it is 20% a year, year in and year out. I don't know that is how the DVD category is growing so I don't think we would be different other than if we have more titles in one year or we tap the library different. But it is going to grow faster than our normal revenue growth.

When you talk to most of the major studios, by the way, just to talk about that, television is the one area in DVD that is growing faster than the rest of their businesses on DVD, so that is very encouraging for our library and our current shows. Doug, in terms of the VOD, we're talking to everybody. Some of these cable operators obviously there is some question about whether it will be beneficial to us. As you know, we have said this. We are open to our content being everywhere as long as we get paid appropriately for it. We are looking at every possible combination thereof. Once again, the advertising model has worked better for us than the pay-per-view model. But if a cable operator comes to us with a situation where we feel it is equitable, we of course will listen to it. As yet, that has not been presented to us. Doug Mitchelson - Deutsche Bank : If I could just follow up on the DVD comment, can you give us a sense then if it is released based, how much of your library do you feel you have monetized and how much might be left to be released?

I can't tell yet. We still have a lot of titles that have been untapped. Every year we have come out with seven or eight of them and we still have a very, very large and expansive library. So I can't quantify how much we have got left.

Your next question comes from John Blackledge – JP Morgan. John Blackledge – JP Morgan : Can you remind us how Showtime's output deals, when they are up and if you are negotiating for new deals? Also, Leslie, if you can just provide some detail on the newer feature film unit, how many films per year negative cost per film if you're thinking about co-financing or giving up rights in certain windows? Fred, CapEx more than doubled in the first quarter. I'm just wondering if that is a good run rate for the rest of the year? Thank you.

In terms of Showtime, John, the three deals we have, the Paramount deal is up at the end of this year. Lionsgate and MGM are up in the end of next year, the end of '08. We have had preliminary discussions with all of them. We're looking at different models for how the films should work on pay cable and that is all I will say about that. In terms of our film unit, we have hired exactly two people, an executive and a secretary. The wheels are starting in motion. We're setting up the operation. There is a lot of financing money that is there. We've been offered some very, very attractive financing. The gentleman we've hired is Bruce Toby, who is an excellent former Paramount executive who we like very much; a very smart, capable guy. We're looking for our creative executives. We're talking to everybody. The game plan still remains to do four to six movies a year in the $10 million to $50 million range. That is our game plan right now. If all goes well, our first movie won't be out for 18 months from today. That is sort of what we're looking at.

On your CapEx question, I think the first quarter is going to be a little bit heavier. As we gave guidance at the start of this year, we said our capital spending would be somewhere in the $450 million to $500 million range. Last year as you will recall, we were a little south of $400 million at $396 million, something like that. I think the first quarter is a little bit heavier particularly as we build out the station. About half of the growth had to do with station facilities and those should be completed by the end of the second quarter for the most part. I think you'll see the run rate, you won't see a doubling of over last year but we are stepping up because the shift will be into outdoor with the digital spend and the digital build out, but again, we're still comfortable with the outlook of $450 million to $500 million capital spending for '07, which should be more of a high watermark for us. After that, we should start to drift back down to the low 400s or high 300s.

Your next question comes from Ben Swinburne - Morgan Stanley. Ben Swinburne - Morgan Stanley : Let me go back to the radio side, we haven't touched on that much today. Les, can you elaborate a little more on the new management team's strategy to improve revenue growth in that business? Specifically, you talked about the lack of sports contracts in the quarter helping drive margins higher, but you could argue that new investment in programming is going to be necessary to drive a better top line story. So how do you think about margins in radio going forward? Is there a period of time where Dan is going to push margins down as he invests in new programming and then it will benefit long term? How do you think about that?

I think equating new programming with bad sports contracts is the wrong way to look at the radio business. We were in sports contracts that literally were breakeven or worse over the last number of years and we're very happy to be done with them. We have renegotiated a number of them and we have gotten out of a number of them. In terms of new programming, that will not affect the margins at all and the way Dan is doing it. You know, the cost of programming has never really affected margins in a great way unless you're dealing with certain high-priced talent, per se. Look, Dan has brought a new lease on life to the radio group. He is an exceptional leader. He is well liked within the business. I'm not going to talk specifically about what he has done. He started about three weeks ago. He is making certain changes in terms of how the group is organized, certain sales methods that are being used, and how he's looking at the programming. Put it this way. I'm very excited over the things that I hear. I can't be any more specific than that, but I have a lot more confidence that the radio group is going to be doing much better this year.

Thank you very much for joining us. Deborah and I will be around for the rest of the day for questions. Have a good day, everyone.