Tuesday, August 8, 2017

CBS Expands Streaming Services, Earnings Beat Expectations

CBS Corp is taking its streaming service abroad and launching an online sports service to appeal to the growing number of viewers who prefer to watch their favorite shows online, executives said on Monday.

CBS, owner of the most-watched U.S. TV network, will launch its CBS All Access service internationally in the first half of next year, starting in Canada, the company said as part of second-quarter earnings.

The New York-based broadcaster is also planning to launch an online streaming sports service, which is yet to be named, announced CBS CEO Leslie Moonves on a post-earnings call. CBS shares rose 0.73 percent in extended trading.

According to Reuters, CBS said it will have more than 4 million streaming subscribers between All Access and its Showtime streaming service by year-end. The company had previously said it was anticipating 8 million subscribers by 2020, a goal it now said is conservative.

Expanding its online streaming services is part of a push by CBS, whose shows include "The Big Bang Theory" and "Homeland," to decrease its reliance on advertising as more viewers go online.CBS reported quarterly earnings and revenue that beat analysts' expectations on Monday.

Here's how the company did compared to what Wall Street expected:
  • EPS: $1.04 vs. 98 cents expected, according to Thomson Reuters
  • Overall revenue: $3.26 billion vs. $3.09 billion expected, according to Thomson Reuters
In the year-ago period, CBS reported adjusted earnings per share of 93 cents on revenue of $2.98 billion.

CNBC is reporting entertainment revenue came in above analysts' expectations. The segment brought in $2.18 billion, above the $2.02 billion that analysts had projected according to StreetAccount.

CBS said that the better-than-expected performance was driven by strong revenue growth in affiliate and subscription fees. In the second quarter, the company saw $848 million in fee revenue. That figure represents a 38 percent year-over-year growth for the business.

CEO Les Moonves said the return of "Twin Peaks" helped boost Showtime subscriptions "dramatically."

Growth in CBS' subscription service fees has gained importance amid cord-cutting concerns and declining ad revenue. But in the second quarter, CBS saw advertising revenue grow 6 percent year over year.

CBS beat revenues but still flat: Point View's David Dietze from CNBC.

Moonves said in a statement that CBS has benefited from recent "skinny bundle" deals with other providers as well as its own streaming services such as CBS All Access and Showtime. Moonves also said those in-house services are on track to hit 4 million subscribers by the end of the year.

CBS All Access will also expand globally, starting with Canada by the end of 2018, the company said in a statement.

Monday morning, AT&T and CBS announced an agreement in which CBS, as well as the CW, Showtime, CBS Sports and Pop, will be available on AT&T's DirecTV Now live streaming service.

CBS Radio saw a decline. CBS Radio revenue fell from $313 million a year ago to $306 million in Q2 2017. Net earnings showed a $339 million loss in the quarter. However, adjusted for restructuring charges and the stock valuation of Entercom as part of the pending sale, CBS Radio had $30 million in net earnings for the quarter. CBS Radio is classified by CBS Corp as “held for sale,” which takes Entercom’s stock price into account when calculating its figures.

During its Q2 earnings call Monday night, CBS executives confirmed its deal to merge the CBS radio stations with Entercom is on track to close in the fourth quarter. The company said the SEC has approved the deal and now both companies are only waiting on approval from the Department of Justice.

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