CBS Quarterly Earnings Exceed Expectations

CBS on Wednesday reported third-quarter earnings of $3.03 cents per share on $3.37 billion in revenue, beating Wall Street's expectations due in part to political advertising and Thursday Night Football.

According to The Hollywood Reporter, CBS was expected to earn 73 cents per share on revenue of $3.32 billion. The huge discrepancy in the per-share earnings are owed to a $1.56 billion gain recognized in connection with the company's split-off of its billboard business, Outdoor Americas. When adjusted for that event, CBS beat per-per-share earnings expectations by a penny.

Despite the fairly strong report, CBS acknowledged "softness in the overall advertising marketplace" and, in doing so, echoed a concern this earnings season among analysts and media executives. So far this week, for example, Discovery Communications and 21st Century Fox each reported sluggishness in TV ad sales.

Revenue that CBS attributed strictly to advertising rose 1.6 percent quarter-over-quarter, while revenue associated with affiliate and subscription fees were up 4.3 percent. Content licensing and distribution, though, fell fractionally.

Among the conglomerate's reporting segments, local broadcasting fared best in terms of revenue, which was up 6 percent to $680 million. Cable Networks was next, with a gain of 5 percent to $624 million. Entertainment, which is made up of the CBS TV network and studios as well as the distribution group, interactive and CBS Films, was up 1 percent to $1.91 billion. Publishing dropped to $199 million from $224 million.

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Les Moonves

Speaking to analysts on the company’s third quarter earnings call, CBS Chief Executive Leslie Moonves said “fairly definitively” Showtime will have such an “over-the-top” Web offering in 2015, according to The Wall Street Journal.

CBS has already launched such a service for its broadcast network and on Thursday it will debut a streaming news service called CBSN.

CBS is anticipating a battle with satellite operator Dish Network Corp. as the companies renegotiate their carriage contract, which expires at the end of this month. Dish Chairman Charlie Ergen said Tuesday that the CBS broadcast network’s new online service “makes that product less interesting” for pay-TV operators because “customers have a choice to get it somewhere else.”

CBS’s Mr. Moonves, noting that the network’s ratings are up this season, sounded confident about the Dish situation. “We’re determined to get paid fair value for our programming. We know how to get this done and rest assured we will,” he said.

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During Wednesday's Conference Call with analysts, Moonves reported a "strong"quarter for local TV and radio.

"In local, both our television and radio stations had very strong quarters. On the television side, political spending, retrans and NFL sales all contributed to double-digit third quarter growth, and Thursday Night Football has given a significant lift to our late local news here in the third and fourth quarter. All but one of our games featured teams from our O&O markets, resulting in late news ratings that were 20% higher in our key news demos -- demo of adults 25 to 54.

"Radio also had a strong quarter as we continue to focus on our big market strategy. Last month, we made an agreement with the Beasley Broadcast Group to swap 14 stations for 5 stations, exiting some of our midsized markets while building our presence in Philadelphia and Miami. We own television duopolies in both of these major markets, meaning our new radio stations are a terrific complement to our existing local portfolios.

"In Local Broadcasting, third quarter revenue of $680 million was up 6%, driven by strong political spending as well as higher affiliate and subscription fees. TV stations were up 10% while radio was up 2%."