Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition.
(Tabular dollars in millions, except per share amounts)

Management's discussion and analysis of the results of operations and financial condition of CBS Corporation (the "Company" or "CBS Corp.") should be read in conjunction with the consolidated financial statements and related notes in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Overview

For the third quarter of 2009, CBS Corporation reported revenues of $3.35 billion, down 1% from $3.38 billion in the third quarter of 2008, and for the nine months ended September 30, 2009 revenues of $9.52 billion decreased 9% from $10.42 billion in the same prior-year period. Advertising sales during the first nine months of 2009 continued to be negatively impacted by the economic recession; however, advertising in several major categories, including automotive and financial services, began to show signs of improvement in the third quarter. As a result, the Company has seen improved revenue trends during the third quarter and continuing into the fourth quarter. Revenues for the 2009 third quarter and nine-month period also benefited from the domestic syndication sales of Medium, Criminal Minds, Ghost Whisperer, Everybody Hates Chris and Numb3rs.

The Company reported operating income of $418.2 million and $767.9 million for the three and nine months ended September 30, 2009, respectively, versus an operating loss of $13.62 billion and $12.46 billion, respectively, for the comparable prior-year periods, which included a pre-tax non-cash impairment charge of $14.12 billion to reduce the carrying value of goodwill and intangible assets.

The Company generated cash flow from operating activities of $567.9 million for the nine months ended September 30, 2009 versus $1.71 billion for the comparable prior-year period principally reflecting lower advertising sales and increased investment in programming, including higher investment in entertainment programming, contractual increases in sports programming and investment in theatrical programming. Capital expenditures decreased $164.1 million to $185.5 million for the nine months ended September 30, 2009. During the first nine months of 2009, the Company refinanced $978.3 million of its 7.70% senior notes due 2010 through the issuance of $1.0 billion of senior notes with maturities in 2014 and 2019.

Consolidated Results of Operations

Three and Nine Months Ended September 30, 2009 versus Three and Nine Months Ended September 30, 2008