Home entertainment andpublishing revenues could both be challenged over the intermediate terms butpressure can be accommodated within the context of existing ratings. Potential Showtime cancellations are a moderate concern inthis economic environment, however, Fitch would expect general stability overthe intermediate term from CBS re-transmission fees, first-run syndicatedprogramming, and off-network syndication cash flows. –Non-Advertising Revenue (First-Run Syndication, Off-Network Syndication,Showtime and other Carriage Fees, etc.): Fitch expects CBS’s non-advertisingrevenue (approximately one-third of total revenue) to remain fairly resilientduring this downturn. Long term,Fitch expects CBS’s top 25 market presence of local properties will continue tokeep it relevant with national spot advertisers. CBS’s solid network ratings relative to its competitorsshould provide some offset to a challenging pricing environment. While cyclical national advertising remains a concern,especially in this environment, Fitch would expect it is more likely to reboundas the economy improves.

While the majority of the national advertisingrevenue comes from the CBS Network, the portion that the local propertiesreceive is material to each individual business and, importantly, the company’soverall cash flows. –National Advertising Revenue (CBS Network, National Spot Advertising on theLocal Properties): Fitch estimates approximately 35%-40% of total CBS revenuecomes from national advertising. Fitch continues to expect rationalization of advertisingoutlets in local markets (e.g., newspapers) and that the local elements of CBS’sportfolio are viable over the long term. markets,does not have any exposure to print-based products, its radio stations have akey presence in local news/talk/sports programming which should be moreresilient to secular challenges, and its outdoor business should benefit fromtechnological advances.

Beyond auto advertising, many of theother challenges facing CBS’s local advertising businesses appear more cyclicalthan secular as the company operates substantially in the top 25 U.S. Obviously, auto advertising is a main negative driver and Fitchexpects a large portion to be permanent. –Local/Regional Advertising Revenue (Local TV, Radio, Outdoor): Fitch estimatesless than 35% of total CBS revenue is derived from local/regional advertisingand believes this revenue stream is the predominant driver for the overallweakness at CBS. Fitch expects the one-third ofrevenue derived from non-advertising sources to remain fairly resilient throughthe downturn.