Thursday, February 16, 2017

CBS Profit Beats Expectations Despite Revenue Drop

By Jessica Toonkel

(Reuters) - CBS Corp, owner of the most widely-viewed U.S. television network, reported a fourth-quarter profit that beat analysts' estimates, helped by higher political advertising and a rise in retransmission revenue.

Advertising sales, which accounts for half of the company's total revenue, fell 2.8 percent to $1.80 billion partially due to fewer NFL Thursday night football games this quarter as well as lower-than-expected ratings for those games.

On a call with analysts Wednesday, CBS Chief Executive Officer Leslie Moonves said that CBS was in talks with the NFL about new formats to speed up games to help with ratings, but he said CBS would not cut ads.

Les Moonves
"If there are ways to do advertising in different ways, we are looking at that," Moonves said.

Moonves emphasized he still views NFL as "the premier property in all of media."

CBS, which is home to popular shows such as "NCIS" and "The Big Bang Theory," has been facing a slowdown in its advertising revenue as advertisers shift more dollars from TV to online.

To address this, the New York-based broadcaster, which also owns cable network Showtime, is focused on shifting its revenue stream from advertising to streaming video providers as more viewers watch their favorites shows online.

Last year, CBS signed deals with Hulu and Alphabet Inc’s Google to be included in their upcoming streaming video services, which are expected to go live in the next few months.

On Wednesday, CBS also announced a deal with Verizon Communications Inc to distribute its content, including its Showtime premier cable channel.

CBS said it is on track to exceed its goal of having 8 million subscribers for its online streaming video service, All Access, and its online streaming Showtime service by 2020.

Overall, the company said advertising benefited in the quarter from political spending at local television stations in the wake of U.S. presidential elections late last year.

The company is very close to renewing its hit, "The Big Bang Theory" for another two years, Moonves said on a post-earnings call.

In addition, CBS’ revenue was lower because the network televised three fewer “Thursday Night Football” games compared to the previous year period. Advertising revenue was down nearly 3% in the quarter. Weaker NFL ratings contributed to the drag.

Earlier this month, CBS agreed to merge CBS Radio with Entercom Communications Corp. CBS plans to split off CBS Radio through an exchange offer just prior to the merger. CBS hopes to complete the transaction in the second half of the year.

The company earned $1.11 per share on an adjusted basis, beating estimates of $1.10 per share, according to Thomson Reuters I/B/E/S.

Total revenue fell 2 percent to $3.52 billion.

CBS' shares were trading up 1.1 percent after hours around $65.24.

Bloomberg Markets with Carol Massar and Cory Johnson.

GUEST: Geetha Ranganathan Tech and Media Analyst Bloomberg Intelligence Discussing CBS Corp., owner of the most-watched TV network in the U.S., posted lower fourth-quarter sales after carrying fewer National Football League games on Thursday nights and attracting smaller audiences to the games it hosted.

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