Good day, everyone. Welcome to the CBS Corporation Fourth Quarter and Fiscal Year End 2010 Earnings Release Conference. [Operator Instructions] At this time, I would like to turn the conference over to Executive Vice President and Investor Relations, Mr. Adam Townsend. Please go ahead, sir.

Thank you, Lisa. Good afternoon, everyone, and welcome to our fourth quarter and full year 2010 earnings call. Joining me for today's discussion are Sumner Redstone, our Executive Chairman; Leslie Moonves, President and CEO; Joe Ianniello, Executive Vice President and CFO. Sumner will have opening remarks and will the call over to Les and Joe, who will discuss the strategic and financial results. We will then open the call up to questions. Please note that during today's conference call, financial results and comparisons, with the exception of revenue, will be discussed on an adjusted basis unless otherwise specified. Reconciliations for non-GAAP financial information related to this call can be found in our earnings release or on our website. In addition, 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 webcast of this call and the earnings release related to today's presentation can be found on the Investors section of our website at cbscorporation.com. With that, it's now my pleasure to turn the call over to Sumner.

Thank you, Adam. Good afternoon, everyone. I thank you for being with us today. Now I'm not given to all the stations, but the performance of CBS this year was nothing less than sensational. What an extraordinary finish to an extraordinary year. Every single division improved on its performance and Leslie's team, as usual, they did everything right. Our strength lies in our extraordinary content and CBS' content leads in every single area where CBS competes: On the network, which is yet again ranked one; on all the global markets where people watch our hit programming on our major market TV and Radio. Nationwide and on our top global websites, CBS has the content that by far leads its competitors, the content that audience want most, and that content and our performance get better and better and better. We saw it in the 2010 results. We're seeing it continue in 2011 today, and I am certain we'll keep seeing it for years to come and it will be never, never-ending. The winning streak for CBS is bound to continue under the great management team, and it is a great management team, led by Les Moonves. So let's now hear from my very close friend, CBS' CEO, Les. And Les, I congratulate you.

Thank you very much, Sumner, and good afternoon, everybody. Thank you for joining us. I'm very pleased to discuss our fourth quarter results with you today, results that capped a tremendous 2010 and speak to the momentum we saw throughout the year and are now seeing this year as well. Every one of our businesses grew during the quarter, with solid revenue increases and double-digit OIBDA growth across all of the company's operating segments. Our success continues to come primarily from the performance of our content and the increasing demand we're seeing for that content in an improving economic marketplace, locally, nationally and internationally. Today's very strong fourth quarter results closed out a terrific year which we have consistently delivered on our promises. We've capitalized on the sharp increase in advertising, while at the same time continuing to diversify and de-risk our business model by building profitable secondary revenue streams that don't depend on advertising. We've prudently managed both our cost structure and our balance sheet and at the same time, delivered more value to our shareholders. And through a number of long-term strategic deals throughout the company, we've set up CBS for a very bright future, one in which we are ideally positioned for continued growth this year and beyond. Not only was it a very good quarter and year, but given the growing value of our content, the trends we see in our businesses and the media landscape as a whole, we expect these results to continue for a long, long time. Before I turn it over to Joe and we take your questions, I'm going to spend a few minutes to walk you through our financial and operational highlights, beginning with our full year and fourth quarter results. Our revenue for 2010 of $14.1 billion was up…

Thanks, Les, and good afternoon, everyone. Today, I'll provide some more detail on the results for the quarter and full year and update you on what we're seeing in 2011. I'll start with our total company results for the quarter. Our 11% revenue growth for the quarter can be broken down as follows: Advertising revenue was up 12%, reflecting the continued strong ad market both locally and nationally. Content licensing and distribution was up 21%, driven by strong domestic and international syndication sales. Fourth quarter affiliate and subscription fees were up 1% due to the impact of a one-time reclassification in the prior year. To give you some color on the underlying growth within this category, Cable affiliate revenue was up 7%, and retrans revenue up nearly 50%. So for the full year 2010, affiliate and subscription fees were up 9%, which is much more indicative of the performance going into 2011. As Les said, OIBDA of $770 million was up 32% from the prior year. This quarter, we are adjusting for $15 million of restructuring activities, as well as a $44 million charge for the early extinguishment of debt that we discussed on our last call. You will see the benefits of these actions in 2011. During Q4 of 2009, we also had restructuring charges of $13 million and impairment charges of $186 million. So clearly, our reported results were up significantly more than our adjusted results we're discussing here. We expanded our OIBDA margin for the fifth consecutive quarter to 20%. Meanwhile, operating income was up 45% for the quarter, and diluted EPS came in at $0.46, up 77% from the prior year. Let's quickly recap our full year results, which speak to the continued strength of our businesses. Total company revenue was up 8%, OIBDA was up…

[Operator Instructions] And our first question comes from Jessica Reif-Cohen with BofA Merrill Lynch.

Les, as you think about the changing landscape and your positive commentary about secondary revenue and trends, can you talk a little bit about content monetization, how you're thinking about things like Netflix or Avalon's new streaming service? What windows will you sell your content to? How much of an opportunity is it for CBS?

Jessica, we obviously spend a lot of time talking about this, and there are a lot of new platforms out there, and it's a topic of conversation among many companies, and different companies have different attitudes towards it. Advertising on our network is our number one priority, and secondary is the syndication valuable domestic and internationally, which are all in the numbers of billions of dollars. We are looking at some of these platforms, and we're determining what will augment those two forms of revenue, first and foremost, without in any way hurting what we're doing. Our syndication operation is at full tilt, and obviously, with this kind of upfront, as well as scatter marketplace, the numbers that are coming into the network are truly remarkable. So we're not going to do anything to damage that. At the same token, we have the largest television library in the world. So we have many assets and many ways of looking at things. So what's great about these assets, we're still selling I Love Lucy along with CSI. So we're looking at these new platforms, and on a case-by-case basis, we're judging what will help us and what won't hurt the core business and what won't hurt the family jewels. The great news is all these platforms want and need our content, and they're offering us phenomenal deals and we will make some of these deals.

And then just on Radio, you guys are way outperforming the market. Is that all from your ratings or format changes? And can you talk about what your top 10 markets did in terms of revenue growth in the fourth quarter?

I'll take the first half, and I'll give the second half to Joe. Yes, we changed the formats in 25 Radio stations. In 23 of them, their ratings are up at least double digits. So Dan Mason and his team have done a remarkable job of changing it. We've straightened out the cost structure. We've restructured our Radio groups, and they're just performing at a remarkable rate, and as you said, they've outperformed the marketplace, and that's partially from programming and partially because of efficiency.

Yes, and Jessica, it's Joe. The top 10 are definitely leading the way in terms of the revenue growth. So again, total group was up 14%, so you should just assume the top 10 performed better than that.

And for our next question we'll go to Anthony DiClemente with Barclays Capital.

From a big picture standpoint, it feels as though TV has got a tremendous amount of momentum, and the ad dollars are coming in the door at a very robust rate. I'm just wondering, from your seat guys, if you could comment on how much of this is share shift from other forms of media? And if you just kind of give us an update on Television advertising's place within the overall U.S. advertising landscape? So how much of it is really the pie growing versus TV's piece of the pie growing within it? That would be great to hear, kind of an updated perspective.

Anthony, it's Joe. Look, it's probably a combination of both. Clearly, obviously, there was a recession a couple of years ago, so I think the total pie is growing. But I do think there is a share shift in the Television category, whether it's coming from print and other kind of advertising category. So that section is growing, and we're taking share within that category. So again, its content that's performing is growing and they're getting the incremental dollars and you're seeing that. So I think there's truth to both of that.

In addition, once again, content remains so important, and the big events are so important. So you look across the landscape, every network that had the NFL did extraordinarily well. Those numbers were way up. Every major event over the last year, the Academy Awards, the Grammys, et cetera, have all done exceedingly better than the previous year. American Idol is not dying, as people predicted it would. Network Television is still unbelievably strong, it never went away. All the doomsayers about, "Oh, the new media's going to take away." New media's great. It augments broadcast, but broadcast is still the place where you can reach 111 million people.

One more on the topic of new media, which would be -- you did mention in your prepared remarks that online display ads were up in the mid-teens. I'm just wondering, can you give us an update on what percentage is total network ad revenues that would represent? And sort of order of magnitude of how much of the growth that online display is driving?

Yes, it's very small. Obviously, the segment just for the quarter's total revenue is $2 billion. So network, we said network advertising was up 8% and the total revenue for this segment was up 11%. So that gives you a sense of the size, and obviously, we've been reporting historically the Interactive revenue for a full year basis in the $600 million range on a full year basis. So again, it's not driving it. It's certainly growing faster, but network advertising is by far driving the shift.

And for our next question we'll go to Doug Mitchelson with Deutsche Bank.

So Les, some of your peers in the Broadcast business are taking the make goods and pushing them off to the June quarter because the first quarter ad market's so strong. Are you seeing that impact your ad sales, the fact that others are opening up extra inventory?

Doug, without patting ourselves on the back, our ratings are the highest, and we haven't done one make good this entire season. The scatter is coming in. Our sales department calls us every day asking us to yank promos and put the ads in there. So the marketplace was extremely strong in fourth quarter, as we said in mid-30s. It's higher in the first quarter. We view strength all the way along. When you look at 40% higher than only six months ago, that's a pretty significant number.

Well, it looks like 2Q will be even tighter than 1Q now, with more make good delivery in Q2, and I'm trying to remember a better upfront setup than this year, and I can't, so...

Nor can I. This is going to be pretty good.

Well, I wanted to see how bold you were today and see if you wanted to predict 10% [ph]...

My sales department gets mad at me when I predict numbers in May, so I'm not going to do it in February.

Les, did I hear the Radio pacings right? Did you say low- to mid-single digits for the first quarter?

That's correct, Doug.

And is that a pretty reasonable pace? How do you feel about that as you look out through the year?

We feel pretty good. Obviously, I'd love to have better longer-term visibility, but the other bullish sign you can take away from this is advertisers are booking earlier, so we're getting a little bit more visibility. So we feel pretty good about that range.

And for our next question we'll go to Michael Morris with Davenport. Michael Morris - Davenport & Company, LLC: Two questions. First of all, with respect to the syndication pipeline in the coming year and the contribution you got from the content in the fourth quarter, can you help us understand how much that contributed to EBITDA in Entertainment in the fourth quarter, the growth that you had there? And given that the business can be kind of lumpy, what should our expectation be for the coming year? And then just quickly over on Cable, can you give us an update on what the costs are going to look like in the coming year? Just, I guess refresh me on where you are in purchases of original films and whether the contract rolling off there will lower your cost year-over-year?

Look, the syndication, what we sold with the second cycle sale of CSI. As Les said, we have a vast library, so from every single quarter, we're out there looking at what we're going to sell, what we're not going to sell, so there may not be first cycle available. But because of the size of the library, we're going to continue to look at second cycle sales. And in some of these instances, when we do these things non-exclusively, we can sell them kind of more than once. So we feel pretty good about that. So it's hard to predict, Mike, what we're going to do in 2011, but realize we have an inventory list of our assets and we're looking at it all the time, and if it feels right, we're going to execute it.

And in terms of cable, yes. As we move down into next year, the cost of the movies definitely goes down. It's not to say that we're not in very good shape because we have deals with the Weinstein Company. So last year, we had the Academy Award winner Hurt Locker. And this year, we have what looks like it's got a good shot to win, King's Speech, plus we have all the Spielberg movies at DreamWorks and the DreamWorks deal, as well as the Summit movies, so we have the Twilight. So we have made better deals for less money. We've put more money into original content, but the cost of the product definitely be going down as our subs go up. So it's a good profit profile.

And just to add, Mike, we did say in our prepared remarks that the margin, we expect the margin to expand further at Showtime from the full year 39%. Michael Morris - Davenport & Company, LLC: And just back on the first point on syndication. So when you do a second cycle of CSI, for example, is that non-exclusive? Are you able to also consider other...?

The answer is it depends on the deal, and obviously, for the CSI, it's obviously the margin flow-through will be different when we own 50% or 100% of flow-through to EBITDA. So each deal is different.

And for our next question we'll go to Laura Martin with Needham & Company. Laura Martin - Needham & Company, LLC: Les, I think we have to go back to the statement you made earlier on that said you expect to exceed peak margins over the next several years. So Joe, if you could just remind us what peak margins are. And then Les, if you could talk about -- typically these expansion cycles go on for five and six years, so if you're going to exceed peak margins for the next several years, how high could your margins get in this cycle?

I'll start with the first, Laura. I think again, if you look peak and peak defined is pre-recession in the '06, '07 kind of cycle, it's kind of the low 20s, and I think again, for the last two quarters we've been at 20, and we said we expect to expand them in 2011. So I think you're right in that all of the incremental advertising and affiliate revenues had such high margin that you really see the flow-through, and again, as we maintain our cost structure, you really get that kind of flow-through at a really significant high rate. So we're very bullish. We can do it probably a lot sooner than a lot of people predicted.

Yes, just to expand on that. TV Stations, obviously, that margin has room to grow and we're still not where we were or even up to some of our competitors in terms of that. We are definitely growing there. Cable, the Showtime margins will expand. And as the network -- great news is our cost structure, despite the fact that we have hits, has remained stable, what we spent for programming over the last three or four years, and that will continue onwards. So as advertising increases, that margin will increase. So those are three of our largest businesses we have. The margin is expanding, and that's why we're looking at '11 and '12 with great relish. Laura Martin - Needham & Company, LLC: And my follow-up question is on allocation of capital. So the returns on capital at CBS are going through the roof as your free cash flow explodes. Joe, are you thinking you're going to continue to pay down the tax advantage pension debt? I guess I'm looking at kind of your free cash flow priorities and allocation. How should we think about what you're going to be doing with your free cash flow?

I think we should be thinking about it, it's opportunistic. We're looking at that, Laura, all the time. I think again, certainly, there is some appeal currently right now given where interest rates are and where we borrow and the tax advantage funding of the pension. Again, in the fourth quarter, we pre-funded $167 million, so clearly we get a tax deduction on that gross number. So we're looking at that all the time, and again, we'll continue to be opportunistic, but we will always focus on returning value to our shareholders as well.

And our next question comes from Michael Meltz with JPMorgan. Michael Meltz - JP Morgan Chase & Co: Can you isolate for us what was the Borders-related write-down in the fourth quarter, please?

Mike, we're not going to break that down specifically. Just know that we've minimized our exposure as of year end and we stopped shipping product to them again at the end of December. So we don't want to quantify exactly that, but we're adequately reserved. Michael Meltz - JP Morgan Chase & Co: I think they're filing today. You've put a number at $34 million out there. Was that in the fourth quarter?

That is not our exposure, Mike, at the end of the year. That is definitely not our exposure at the end of the year, not even close. Michael Meltz - JP Morgan Chase & Co: Can you also isolate for us the -- you gave a couple of things that will skew the year-over-year numbers in Q1. Can you actually quantify what was Super Bowl last year and what is the NCAA drag this year, please?

Okay, as far as the Super Bowl, I think it was definitely widely reported, estimates of what that is. I mean, again, it's fair to say it's probably a couple of $100 million, just to give you a sense of the size of what that is. And obviously most of that, the vast majority of that would hit the Entertainment segment, and the other piece would obviously hit Local Broadcasting. So that's the size of that kind of magnitude. The NCAA, it's hard to say because we haven't aired the tournament yet. But basically, the premise for the transaction was we were going to expand the overall revenue pie between us and Turner, and we'd get better economics. So we have a lot of protection on the downside and unlimited upside, but again, a little too early to predict exactly what that's going to be because we haven't aired the tournament. Michael Meltz - JP Morgan Chase & Co: Maybe another way of asking is this, and I'm sorry for the drag-on question. Are you comfortable with consensus for the first quarter?

We don't give guidance, Michael, as you know, and stuff like that. But again, we try to guide you. We think revenue for this contract will be down quarter-over-quarter to give you a sense of what that is. So again, we're not really giving -- we don't give guidance on quarterly or annual forward numbers.

Revenue's down, but profits are going to be up considerably. It is a question of going from a deal that was losing us a considerable amount of money to a deal that's going to be profitable right away.

And for our next question we'll go to David Miller with Caris & Company. David Miller - Caris & Company: Les, could you talk about the new deal with Turner vis-a-vis March Madness, which obviously starts in four weeks and just some of the other advantages and disadvantages you see with the new deal and sharing this property? I mean it would obviously seem to me that one of the advantages is lower rights fees, which you alluded to, but you also get less gains, and there is the fear out there that people might be fumbling around with their remote controls between all the Turner networks and CBS so on and so forth, trying to find the right games. So could you talk about that, and just from a programming standpoint, what you see as the advantages with sharing this sports right?

Obviously, economically, there was a huge advantage for us going forward to do this deal. Our risk profile is a lot less than it was before, and as we've said many times, it is a very profitable contract for us versus the other way. In the early rounds, there will be four games. When there are four games on simultaneously, they will be on four different channels. We generally look at the game that we want in the first rounds, and for those people in local marketplaces, they will get the game that they want. At the same time, there will be highlights shown on our network of the other three games and vice versa. As you get down to the final rounds, we have the final four for the first four years of the deal, so that will be significant. Those are significant games. And in the regional games, there's sort of alternating games. Obviously, occasionally, there'll be two games going on simultaneously, so you'll be able to watch the one that you want. So as Joe said, revenue goes down, but cost goes down a lot, and probably for our viewer, they will be very happy because they will get whatever game they want to see. So for us, it's a major win in terms of economic things, and by and large, we're getting the games that we want, and the relationship with Turner is terrific. Both teams are selling, and as we said earlier, the sales are going extremely well. They're selling into a very strong sports marketplace, so I think everybody comes out a winner of it. The fans, CBS, Turner and the NCAA.

And for our next question we'll go to Jim Goss with Barrington.

I was interested earlier when you talked about the stable schedule. You get the inevitable problem that sometimes shows start to run their course. And I'm wondering how you determine when to pull the plug on shows these days, especially given the changing nature of schedules versus specific programs in an environment where schedules may be less important? How does it come down? Has it changed a lot?

It's a good question. Number one, schedules aren't necessarily that less important than it used to be. You still can launch NCIS L.A. after NCIS and it holds on to 90-someodd percent. You could launch Mike & Molly after Two and a Half Men, and it's the highest-rated new comedy on the air. It's also a good show, but it's helped by following the number one rated comedy on the air. What happens is, yes, it's a tough problem here at CBS. We tell the people that are out there, "Look, you'd better be really good to make it on our schedule, but if you do make it on our schedule, the chances of succeeding are higher because you will generally be put in a position where you're launched by a successful television show." We also have the advantage of removing shows a year early rather than a year late, and I give you what we did with Without a Trace a year ago where it was a successful show. It had run through its eighth year. We pulled off the show. Their license fee was, at that point, since it was in its eighth year, almost $4 million an episode, replaced it with a show called The Good Wife, which cost about less than half that amount. We also owned 100% of The Good Wife. The ratings were just as good. As a matter of fact, it won some Emmy Awards, and we took it off early and helped our schedule. A similar thing, if you look throughout our schedule, we don't let shows age and just hang around because that's all we got. We don't have to do that, and I think success propels further success, and I think we'll continue to do that.

The one follow-up I'd ask is, to the extent you're getting international sales, are there certain genres that are faring a lot better? Is that becoming a meaningful revenue or profit source for you?

Well, it's absolutely a meaningful profit source on all our shows. Obviously, action-adventure plays a little bit better. In other words, a show like Hawaii Five-0 got an extraordinary amount of money overseas as did the NCIS'. The Good Wife doesn't do quite as well, but yet it does extraordinarily well when you compare it to what a show like that would've done years ago. So once again, as we said earlier, every single one of our new shows was profitable from day one because of the international marketplace, and that keeps growing in leaps and bounds because there are new channels all over the world and new markets opening up. So the international marketplace has never been hotter, and it's a reason we're glad we own most of our content.

And for our final question, we'll go to Marci Ryvicker with Wells Fargo.

Two questions, Les. You said retrans in 2010 exceeded your $100 million target by significant margins. So can you give us the actual number and also tell us your target for 2011? And then secondly, how do you at CBS think about a potential NFL lockout? What's the risk from a revenue and EBITDA standpoint if there are no games?

All right, the first question I'm not going to give you a number for '11. All I've said is that by the end of '12, we'll get $250 million. We're still on target for that. That is our anticipated number for them, and that is not including reverse compensation from our affiliates, which will also be another number that's beginning to kick in now, will be stronger in '11 and by '12 also will be a significant number. Regarding the NFL lockout, obviously, it's something that we're all hoping does not happen. We hope they come to an agreement. We obviously have an agreement with the NFL where we do give them some money, but that the contract would be extended to a certain extent if there were any games that we missed. So ultimately, at the end of the day, we do not anticipate losing any revenue. We think we will get the games back in some way, shape or form. So they will be an immediate hit, and I'm guardedly optimistic that Mr. Goodell will come to an agreement with the players before the season starts and we'll be back playing.

If the money doesn't go to the games, would it be safe to say that it could be deployed into Primetime?

We don't need any -- you mean in terms of advertising revenue?

Yes.

I don't know. I guess that's possible. There's a certain amount that the companies designate for football. Anheuser-Busch spends an awful lot in Prime, but they also spend a lot in football. Could the marketplace get tighter in Prime? Probably. That probably would happen, but not necessarily.

And this concludes today's call. Thank you everyone for joining us. Have a great evening.

This concludes today's conference call. Thank you for your participation.