Moonves: CBS Has Terrific Quarter

CBS Corporation today reported results for the second quarter of 2016, including the highest second quarter diluted earnings per share ("EPS") in the Company's history.

"CBS turned in another terrific quarter, on the way to another outstanding year, as we continue to take advantage of all the growth catalysts before us," said Leslie Moonves, Chairman and Chief Executive Officer, CBS Corporation (CBS).

Les Moonves

"Our base business is very healthy, including our strongest upfront selling season in years, which will benefit us beginning in late September when the new higher pricing takes effect. At the same time, we continue to build our fast-growing, high-margin revenue streams at a rapid clip. During the quarter, retransmission consent and reverse compensation grew 44% and remain on track to surpass $1 billion in revenue this year. Our over-the-top streaming services, CBS All Access and Showtime OTT, continue to exceed expectations, and we anticipate a significant lift next year with the launch of our new Star Trek series on CBS and Twin Peaks on Showtime. Our content licensing business also had a great quarter and was up 16% thanks to lucrative international deals for our Star Trek library programming that will continue to benefit us as new episodes launch in January.

"All of these high-margin revenue streams will become an even bigger part of our revenue mix next year when we expect to complete the separation of our radio business and intensify our focus on our core content strategy. Looking ahead, we will continue to invest first and foremost in premium content while using excess cash to return capital to our investors. We will take advantage of every opportunity that is in the best interest of our shareholders, and we are more confident than ever in our long-term growth prospects."

Second Quarter 2016 Results

• Revenues for the second quarter of 2016 increased 2% to $3.29 billion from $3.22 billion for the same prior-year period, even though the prior year included two significant events which did not recur in 2016: Showtime's distribution of the Floyd Mayweather/Manny Pacquiao boxing event, the highest-grossing pay-per-view event of all time, and the broadcast of the NCAA Division I Men's Basketball Championship  finals on the CBS Television Network. 
• Revenue growth for this year's second quarter reflects a 16% increase from content licensing and distribution revenues, driven mainly by the licensing of five Star Trek series in the international marketplace. Revenues for the second quarter of 2016 also benefited from 44% growth in retransmission revenues and fees from CBS Television Network affiliated stations, as well as revenues from new digital distribution platforms.
• Operating income for the second quarter of 2016 increased 25% to $733 million from $586 million for the same prior-year period, driven by growth in higher-margin revenues, and rose 14% from adjusted operating income of $641 million for the second quarter of 2015.
• Net earnings of $423 million for the second quarter of 2016 rose 27% from $332 million for the same quarter in 2015, driven by the higher operating income, and increased 16% from adjusted net earnings of $365 million for the second quarter of 2015.
• EPS for the second quarter of 2016 grew 39% to $.93 from $.67 for the same quarter in 2015 and increased 26% from adjusted EPS of $.74. Weighted average shares outstanding were 455 million in the second quarter of 2016, down from 495 million in the prior-year period, mainly as a result of the Company's ongoing share repurchase program.

Adjusted results for the second quarter of 2015 excluded restructuring charges of $55 million ($33 million, net of tax). No adjustments were made to reported results for the second quarter of 2016.

Free Cash Flow, Balance Sheet and Liquidity

For the second quarter of 2016, operating cash flow from continuing operations was $225 million compared with $464 million in the same prior-year period, while free cash flow was $184 million compared with $435 million for the second quarter of 2015. These decreases partly reflected the timing of receipts and payments relating to the previously mentioned 2015 pay-per-view boxing event. For the first six months of 2016, operating cash flow from continuing operations was $1.25 billion compared with $881 million in the same prior-year period, and free cash flow of $1.17 billion increased from $835 million in 2015. The increases for the six-month period were driven by growth in affiliate and subscription fees and higher advertising revenues, including the broadcast of Super Bowl 50 on CBS, partially offset by increased investment in content.