Good day, everyone and welcome to the CBS Corporation's second quarter 2008 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. Mr. Shea, please go ahead, sir.

Thank you, Rufus. Good morning, everyone and thank you for taking the time to join us for our second quarter 2008 earnings call. Joining me for today's discussion are Sumner Redstone, our Executive Chairman who, I might add, is suffering from a bit of laryngitis, Leslie Moonves, President and CEO and Fred Reynolds our Executive Vice President and CFO. Sumner will have opening remarks and we will turn the call to Les and Fred for strategic and financial issues. We will then open the call up 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 security filings. A summary of CBS Corporation's second quarter 2008 results should have been sent to all of you. If you did not receive the results, please contact Poonam Desai at 975-3367 and she will get it to you. A webcast of the call, the earnings release and any other information related to the presentation can be found on CBS Corporation's corporate website at the address of cbscorporation.com and now I'll turn the call over to Sumner.

Thank you. Good morning, everyone. Thank you for joining us today. I'm going to begin by saying that CBS Corporation continues to be in a solid position with outstanding brands, world class core business’s and a strategy in place to deliver superior long-term performance. It's in the most difficult environments that an organizations underlying strength emerges. Looking back at the quarter's challenges, considering the difficulty we faced, I'm proud of what the CBS team was able to accomplish. As you all know, the economy is the midst of a slowdown. That slowdown has affected many sectors and many companies. While national business is holding up well, this softness in the marketplace is being felt mostly on the local level through no fault of management, this obviously, adversely affects CBS's local, radio and television stations. Most important, we are continuing to deliver on our promise to shareholders to generate strong cash flow, paying very attractive dividends while at the same time, expanding the reach of our terrific content to growing areas like the Internet and the emerging international markets. The CBS Corporation portfolio of assets, we say is best in class and it's getting even better with the adjustments that Les and his team make. The result is an evolving portfolio that will be very well positioned to strive over the long-term. And it's the long-term, that we are concerned about. I'm certain that you'll be pleased when you hear from Les, the strategy that we have worked out for CBS. I have no doubt that CBS Corporation will be successful for a very, very long time. And now, with my laryngitis, Les?

Thank you Sumner.

It’s a pleasure to hand this over to you, to Les Moonves, whom I consider to be a great executive and particularly a good friend. Take it on Les.

Thank you very much, Sumner. And good morning and welcome everybody. Thank you for joining us today. I'm pleased to be with you once again to discuss our second quarter results. Today I will walk you through CBS's result and some highlights of our business segments and then I will turn it over to Fred for additional information and insight and then we'll be happy to take your questions. The company delivered revenues of $3.4 billion in the second quarter, up 1% from the same quarter last year, which we consider quite an achievement in today's economy. Top-line highlights from the quarter include strong performances from our international syndication businesses and our Outdoor businesses where we had revenue growth both in North America and abroad. At the same time, we are clearly challenged by the economic conditions affecting many industries, particularly as it pertains to our local businesses. This is affecting sales as well as OIBDA and operating income, both which were down from last year on the quarter. We posted an increase, however, in net income, helped by the sale of our stake in the Sundance Channel. And because of our stock buy back in the past year, our diluted EPS was up 11% to $0.61 versus $0.55 for the same period last year. What I'm most proud of is the fact that, even as we deal with the current environment and invest for growth, we continue to throw off very healthy levels of cash. Free cash flow of $464 million in the second quarter, and $1.4 billion in the first half, up 6% from first half of 2007. This enables us to pay our very attractive dividend of $0.27 per share, and we have a strong balance sheet and sufficient cash on hand to not only continue to…

Thanks, Leslie and good morning to all of you. Let me first discuss the second quarter and first half financial highlights and then provide additional information on our operating performance including free cash flow, our balance sheet and our plan to change our portfolio of businesses to drive growth. Revenue for the second quarter totaled almost $3.4 billion, up 1% over last year second quarter. Strong growth in our license fee revenues from domestic and international syndication, along with the timing of airing the NCAA Final Four games, drove our second quarter revenue growth. Offsetting some of our revenue growth, however, were lower revenues at radio and TV stations, due to divestiture of stations, a decline in same station ad sale, and that's what caused us to offset some of that growth. At the CBS Network, time period sales were down 2.9% versus last year's second quarter. Turning to profits. Adjusted operating income before depreciation and amortization, which excludes stock-based compensation expense and restructuring charges was $802 million for the second quarter, down 10% from last year at this time. The drop in adjusted OIBDA was due to a shift in our revenue mix, from very high margin ad revenues to syndicated revenues. Now, our margins from syndicated revenues are still very attractive, however they are not as high as our traditional ad revenues. On the operating cost and overhead front, we have aggressively reduced our operating expenses in 2008, by almost $150 million. And we have taken almost $48 million of restructuring charges as we reduced headcount across the company. Most of the reductions have been at our local businesses; radio, TV stations and Outdoor, which as Leslie just mentioned, are experiencing some softness in their ad revenue due to the slowing US economy. We will continue to focus…

Thank you, sir. (Operator Instructions) And for our first question, we go to Michael Nathanson with Sanford Bernstein.

Two for, Fred. You didn't say, but can you give us what the update was for local station revenue for TV in the quarter? And then can you take out cost as fast as the revenue declines, give me a sense what the stations did in the quarter?

Second quarter, the TV station were down versus last year. We don't break out the complete comparables, but they were down. As you probably know, the second quarter has the least amount of political. Its very strong in the first quarter, strong in the third, and strong in the fourth, which we are starting to see build. So, stations were pacing down versus last year. And on the cost, can we take out cross faster? As you know Michael, ad revenue has a high margin; I don't think that's possible. As you look at this business as you have, our costs have always been flat to down. We've taken out $150 million that will reduce cost in 2008 and we are still looking at areas of opportunity to take costs out.

Would you say revenues were single digits or double digits decline?

I am not going to comment on the comparable sales.

Okay. Can I ask Les, one. How big is the revenue base and the OIBDA base of the businesses that, stations that you're divesting in radio, what percentage of the overall base is that and have those revenues grown at similar rates as the large stations overtime?

Let me turn that over to Fred.

Michael, it's a little bit fluid on as far as what stations we are going to sell. We've identified the market. This would be roughly $300 million in revenue and about $100 million in operating profit before depreciation. So it's probably, 15% or so of the radio revenue and about 10% to 12% of its profit of the segment.

Thank you.

For our next question, we go to Douglas Mitchelson with Deutsche Bank. Mr. Doug Mitchelson, your line is open.

Sorry, can you hear me? We are almost on the new broadcast season with the disruptions we had in the pilot season. I know you talk a little bit on the last call. Can you give a sense of your level of optimism for ratings this upcoming season? And can you guys subdivide the network ad market between sports and your prime time entertainment? It seems like sports have been strong. Can you just aggregate those two categories?

Sure. We left the strike CBS and we hit the grown running frankly and we ended up having more pilots done than anybody else, and frankly if you just left the television critics association, they were very pleased that we were able to show them our new product, which I'm very high on. Post strike, our ratings began to come back. Everybody is encouraged, Network television is up over the summer months, which is a very encouraging sign. And I think everybody in the world underestimated, what the upfront marketplace would be. We had all heard that it was going to be flat, and it wasn't. It was up for everyone in terms of CPMs and also volume was exactly where we wanted it to be and about where it's been in previous years. The sports marketplace continues to be very strong, but so does Prime Time. We are pacing extremely well with football as we head into the fall. We are very pleased with those numbers. We had an extremely good year last year with football and we are doing even better this year. And once again, judging from how the ratings came back post strike and how they've achieved over the summer and the quality of our products right now, as I've said, we have five new shows which I'm very encouraged and I would arguably say this is the best development we've had in about five years from my point of view, ironic since we have less of an amount of time, we spent less money on it, so maybe we learned a lesson from that. But I am guardedly optimistic that this network season is going to be a great improvement over last year.

Right, thanks.

We'll go next to Marci Ryvicker with Wachovia Securities.

Thanks, I have two questions. The first for the radio station sales announced today. Have you identified potential buyers and can you talk about a specific timeframe in which you want to do this, especially given the economy? And then secondly, in the Outdoor division, I think the press release said, there was 4% organic growth. Does that include or exclude IOA?

Okay. Marci, this is Fred. On the radio stations, as we've said, these are very attractive mid-sized markets and we have been in preliminary discussions with some strategic buyers. So, they will be very attractive to market. I am not going to explain on the phone now, because again, it's a little bit fluid as to, there's a series of buyers that would be interested in this and we've had preliminary discussions with them. On the Outdoor, that is without IOA. Organic is without acquisitions or divestitures. So, that 4% was without the lost contracts or IOA.

Thank you.

Sorry, on timing, as soon as we can get the radio stations. With the way approval process goes with the federal communication commission, my guess is this would probably, if we struck a deal within the next 30 days or so, we wouldn't close until sometime in the first quarter. Maybe it could slip depending on the timing. The deals we just did last year took, on average, about seven or eight months for the approval process. We don't expect problems but it takes a little bit longer.

We'll go next to Jessica Reif-Cohen with Merrill Lynch.

A couple of questions, unrelated. First, I was just curious with the radio sales proceeds being marked for buybacks, why only buybacks, why not acquisition in this environment? There must be a lot of opportunity around? Okay, go ahead.

I was going to say look, we don't rule out the possibility. As Fred mentioned, we bought CNET and we still have $800 million in cash on the balance sheet. When these divestitures happen, we are going to have a lot more money. If there's a great opportunity and there's a great value that fits into our game plan, of course we will look at that and look at it very seriously. What I don't think people understand is our free cash flow continues to be very powerful. So, we are able to do acquisitions, and do dividends, and do buybacks and we will continue to be able to do that.

And Les, another one for you. In the up front, was there anything unusual in terms of the commitments? Was more money deferred to calendar quarters one, two and three of '09 versus the fourth quarter of this year?

Not really. It was a much more ordinary process than anybody anticipated. As we mentioned in our comments, clearly the mainstream network, the broad tent, is benefiting ironically from some of the local slowdown. So, when you look at the quarterly designation, it's not really drastically different from any other year.

And the last question is, I guess for Fred. What is in the new interactive division besides CNET?

Well, it's all the old CBS properties as well. CBS, the former sportsline, CBSsports.com, CBS.com which is our entertainment site, the audience network, as well as our news site,s plus LastFM, have all melded very nicely. And as Fred mentioned, we are extremely pleased with how the integration is going. It really is rather seamless and they are off to the races and the structure is in place and there was very little crossover and we think it's moving along very quickly.

Jessica, I would add that, those CBS properties, as we sort of said, are kind of north $200 million of revenue so you would add on a full year basis, add you would add on CNET, that is the 600 plus number that Leslie referred to in his comment.

Anything needs to be reinstated from prior periods?

Well, as you break out the segment as you know, we will have all comparable periods reported in third quarter, so you'll see third quarter '07 on a comparable period. Of course, 2007 wouldn't have CNET in it because we don't do pro forma’s, but we'll give you enough information so that we can provide an equivalent without getting into the forbidden pro forma world, what it would have been with CNET.

Thank you.

We will inform you, if we get that information.

Thank you.

We go next to Lee Westerfield with BMO Capital.

Thank you. Actually Fred, little more color on the radio potential sale. Two questions here. First, are you prepared to treat them as discontinued ops at this point? Is it not yet based upon the identification of the assets? And second, these assets as they may be sold, are they at a zero cost basis at this stage or what is the tax base we should think of?

Thanks, Lee. We will not be in discontinued Ops because the rules would not allow us to do that because this is really a division within an individual market. Actually, these have a decent tax base, its not as much as you’d like. As you know, we are very tax efficient driven, so there may be some structures that we want to keep the most dollars after tax. The tax basis, this group of stations is kind of in the $400 million to $500 million range of tax basis. Obviously, we think we'll get good values for that so there would be a tax leakage. We don't want to have tax leakage, if there's a structure that will mitigate some of that.

Thank you.

Sure.

We go next to Benjamin Swinburne with Morgan Stanley.

Good morning, thanks for taking the question. I'll ask two if I can. One, on the new CBS Interactive, maybe you can talk about revenue synergies as you bring the CBS sales force over to the CNET properties, what categories are you targeting that you can build more online sales on and how does the CPM differences between sort of the premium stuff you've been selling on CBS digital compared to CNET and how do you see that blended rate tracking overtime? And then second, any update on retransmission? I think you have some contracts with some of the larger public cable operators coming up next year. Any update in the current environment of how you are thinking the benefit to CBS there?

Sure. Thanks, Benjamin. In terms of the CNET integration, what we are doing is we've established certain verticals in our premium content areas i.e., we have the CNET, which is technology, we have BNET which is business. Our news division, CBSnews.com, will fit into with CNET. Our entertainment properties can go together seamlessly. The cost benefits that we are seeing, now that we have a sports presence into the games spot presence into the BNET, means we can sell demographics much more efficiently and the CPMs together will work extremely efficiently and be much high are than they've been before for either grouping. In addition we have set up a structure with the sales heads, report directly to the GMs of their verticals, plus we have set up a sales force where the CBS Television Network is involved with their sales force as well as synergistic opportunities amongst the various verticals at CNET or at the new CBS interactive group. But we are able to get extreme synergies in terms of that. And the good news is that it seems to be working extremely well with the new brands fitting very well into these verticals.

I would just add Leslie that clearly, we think there's some opportunities. We have well positioned with CBS with the auto manufactures, with pharmaceuticals, with financial services, and yet if you look at CNET, that's the audience they attract, particularly on CNET.com, and they are not as strong with that. They are selling more towards like the Dells and the Microsofts of the worlds, and the Googles, those more on the tech side. Yet those users, we think there's going to be a great crossover. We are already seeing it, Neil Ash and his team are welcoming the access that we give them. Also, to your point, CBS Interactive sells very high value video, which is in the $25 to $30 CPM and CNET doesn't have as much video. Today they will as we go forward, so they have a large sales force selling at a lower rate, probably in the $10 to $15 CPM range, but it's a very attractive sales force, where we have a smaller sales force selling high. That's why we love what Leslie just said, we love blending the two together because we get the best of both worlds.

When we were looking at the acquisition and compared the top 20 advertisers of both CBS Interactive and CNET, there were only three that were on both lists. So, there's great opportunity for introducing new clients on both sides of the fence, who are very excited about making a larger buy with us, which makes the synergies happen. In terms of the [re-trans], we are in active discussions with some of the larger guys and we are very confident, they are progressing along very nicely. We don't make a big deal out of it. Over the last year, we've done 25 of the smaller MSOs. We are in conversations with the larger ones and very productive conversations. So, I'm guardedly optimistic its going all go well without making a whole lot of noise, except at the end of the day there will be more revenue for the CBS Corporation.

Thank you very much.

Thank you.

We go next to Jim Goss with Barrington Research.

Thank you, couple if I might. First with regard to Outdoor, one of the strengths I believe of CBS Outdoor has been in its international operations, it's been focused on a couple of key markets. As you move into another market, I wonder should my comment on the balance between domestic and international that you see ultimately and the focus in concentration of the international markets? And then secondly, with regard to the radio station deals, lately evaluation and buyer financing issues have really posed an impediment in getting deals done and I am wondering if you might comment on the time frame and the challenge of getting that accomplished and what the timeframe might be?

Yes. Jim, this is Fred. Our international versus domestic in Outdoor, we want both to grow quickly. Clearly, internationally, we are focused. Our biggest enterprise is in the United Kingdom with the London Underground and we have the quiet enjoyment of that relationship for a number of years into the future. What you see with international Outdoor advertising, IOA, is that we think South America is going to be fast growing. In Argentina, they have a strong position, Brazil and Chile. It's a billboard market, which has a really good margins, so we'd like to grow that. But the biggest business is always be North America anchored by the United States. We still have a lot of growth, particularly in the billboard business in the United States. Everything is turning into digital, and the progress we are seeing on digital like in the United Kingdom, where we have several thousands displays up now, is that the advertisers are really coming to us in droves. The revenue that we are earning on that is up dramatically year-on-year. So, it's changing the medium that way. On radio, clearly, with the strategic buyers, there's a number of ways, either through financing or other kind of structured deals, where we think we can get the value that, after tax that we need. And again, I'd say we are shooting to have the deals wrapped up sometime in the first to second quarter of next year with full approval. So, that is the time line.

Jim, you never know how quickly the SEC is going to act on these things. We are optimistic in that this can move fairly quickly once we've ascertained how we are going to do it.

Rufus, we have time for one more question.

And that question will come from Mark Wienkes with Goldman Sachs.

Thank you. Back to Outdoor real quick, are there significant differences in large market results by regions in the billboard business specifically, non-transit. We're hearing the average contract duration is still shortening, the deals of booking later. So, if you talk to the health of the local versus the national advertising as you look ahead and then a follow-up on the digital side.

Mark, this is Fred again. Listen, the big markets are growing pretty well, and we tend to be in big markets not only in Outdoor but the other. Outdoor doesn't get a lot of national business anyway; it's a lot of local business. We have not been hurt by any of the real estate or home building. We have a very low presence in that. We never have, because we're in the major markets. But we are seeing a lot of good movie business. We are seeing auto in the Outdoor category in the United States actually up and it has been up. So, no, I don't think there's that dichotomy like you see in the broadcast assets between national being strong and the local business’s slowing. You don't see that in Outdoor.

And I guess to switch gears –here; the 1.4 million net new cable subs you talked about, are they coming in the international markets such that the affiliate revenue growth was just 5%?

No, That's Showtime, which is domestic, its domestic here through our regular MSOs. Showtime is the domestic premium cable service, and we really believe that through the Weeds and the Dexter and the Tudors and the quality of our programming that more and more people are signing up for subscribers.

How do we think about the 5% bump in affiliate revenue versus the 10% increase in subs? It's just a stage until the affiliates ramps up?

Well, yes. Clearly that's right because we will have a full year effective in the $1.4 million yet, but we will as we build on that base.

In addition Mark, that includes college sports, which is obviously at a much lower rate of growth financially than Showtime.

Got it, okay. That’s great, thank you.

Thank you.

Thank you very much everyone. We'll be around for the rest of the day to answer any more questions.

And ladies and gentlemen, this does conclude the CBS Corporation second quarter 2008 earnings release teleconference. We do appreciate your participation and you may disconnect at this time.