Hard times hard on CBS

(Fortune) -- Media conglomerate CBS Corp. will release quarterly earnings for the final three month-period of 2007 Tuesday. Whatever its final numbers look like for 2007, they are sure to be better than those the company will tally in the foreseeable future, say analysts.

Given that the broader economy is slowing and possibly heading into recession, CBS (CBS, Fortune 500) isn't in a good position. "The outlook for CBS," says Merrill Lynch media analyst, Jessica Reif Cohen, "is challenging." Cohen and other media analysts are expecting an ad-spending downturn of roughly 6% this year. It could have been a lot worse. Ad spending during 2008 will get a generous boost from political advertising for this year's presidential campaign, and from the 2008 Olympics.

Analysts are expecting net income for CBS's fourth quarter 2007 to come in at 52 cents per share and quarterly revenue of $3.74 billion, according to Zacks Investment Research. That compares to tallies of 59 cents per share and fourth quarter revenue of $3.88 billion a year ago.

It's no secret that broadcast television and radio - CBS's main businesses - are losing audiences to video recording devices, the Internet and video games. "CBS is very exposed to these secular trends," says Doug Creutz, an analyst with Cowen & Company.

Indeed, of all the large-cap entertainment companies, CBS is likely to suffer more than its peers in a U.S. recession, which is an increasing likelihood this year, according to most economists. CBS, for instance, is more vulnerable to an advertising downturn than peers, as 72% of the company's revenue over the last year is derived from advertising. By comparison, News Corp. (NWS, Fortune 500) garnered just 44% of its revenue from advertising, Viacom (VIA) 35%, Disney (DIS, Fortune 500) 23%, and Time Warner (TWX, Fortune 500) 19%.

Companies that draw more revenues from subscriptions generally fare better in a slowing economy. But just 8% of CBS's revenues over the last 12 months have come from subscription services such as its Showtime cable television unit. Perhaps most important, CBS, unlike peers such as News Corp. and Viacom, isn't taking advantage of growing markets outside the United States. Only 11% of its revenues in the last year have come from international revenue streams, compared with News Corp's 47% and Viacom's 27%.

Since hitting a 52-week high of $35.75 last July, CBS's shares fallen 30%.