CBS slashed its annual dividend by 81 per cent as it moved to assure investors it would be able to self-fund its debt maturities until the end of 2012 despite few signs of an advertising market recovery in 2009.

Although the US broadcaster’s programmes topped viewer ratings last year, declines in revenue and profits nearly across the board, excluding its digital business, led to a 52 per cent drop in net income for the fourth quarter.

“I doubt that we have ever seen a global economy as difficult as the one we are witnessing right now,” said Sumner Redstone, CBS executive chairman. “2009 is showing little signs of improvement.”

Les Moonves, chief executive, said: “By taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”

CBS cut its quarterly dividend to 5 cents from 27 cents per share, more severely than UBS’s expectations of a 72 per cent cut. But CBS said its syndication business and strong ratings would make the second half of 2009 stronger than the first.

Mr Redstone said the dividend cut would not affect the debt-restructuring talks between lenders and his National Amusements company, which holds controlling stakes in Viacom and CBS.

Moody’s, a credit rating agency, estimated US broadcasters’ revenues have fallen at the high end of its estimates of 15 to 20 per cent so far this year, with some seeing rates falling as much as 25 per cent in January.

The sluggish advertising market has made meeting debt obligations difficult for weaker broadcasters. Young Broadcasting, an owner of 10 television stations affiliated with ABC and CBS networks, filed for bankruptcy protection last week, following on the heels of Tribune’s filing in December.

CBS said its robust cash flow, moves to cut its dividend and slash spending would enable it to self-fund about $6.2bn due by 2012.

Fourth-quarter net income fell to $136.1m, or 20 cents per share, from $286.2m, or 42 cents per share a year earlier. Adjusted net earnings from continuing operations fell 41 per cent to $226.7m. Revenue fell 6 per cent to $3.53bn. Television revenue at CBS fell 8 per cent to $2.21bn in the fourth quarter and operating income before depreciation and amortisation, excluding charges, fell 35 per cent from the sluggish advertising sales and the lack of the Super Bowl broadcast this year.

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