CBS Misses Revenue Estimates, D2C Streaming Revenue Increases

CBS Corp. said the Super Bowl bolstered its advertising results, helping push up its first-quarter profit, but the media company missed revenue expectations amid a weaker performance in its cable networks business, reports The Wall Street Journal.

The advertising gains highlight the importance of live sports for CBS’s broadcast operations. Executives have already started discussing a new deal with the National Football League, even though its deal with the league runs through 2022. That CBS is already positioning itself so far ahead of its deal’s expiration points to the power of NFL content.

The New York-based company on Thursday also said revenue from its direct-to-consumer streaming services reached a record level, with subscribers to its CBS All Access product and its Showtime OTT streaming service growing 71% from a year earlier.

Joe Ianniello

During a conference call, CBS acting Chief Executive Joe Ianniello said the company plans to spend $8 billion on programming in 2019, putting the company on par with other major networks and direct-to-consumer streaming services.

“The driving force behind our direct-to-consumer services—and our entire company—is our premium, must-have content,” Mr. Ianniello said.

Later during the call, CBS Interactive President Jim Lanzone touted the growth of CBS All Access, adding that two-thirds of subscribers are opting to view a limited amount of commercials.

He also said the vast majority of subscribers to CBS All Access aren’t so-called cord-cutters, viewers that have abandoned traditional pay-TV.

“We definitely don’t view it as a zero-sum game,” he said.

Mr. Ianniello said he expects CBS to continue to benefit from the legalization of sports betting, which has begun on a state-by-state basis since a Supreme Court decision last year that struck down a federal law banning the practice.

First Quarter 2019 Results

• Revenues for the 1Q of 2019 increased 11% to $4.17 billion from $3.76 billion for the same prior-year period. 
• Advertising revenues grew 18%, driven by the broadcast of Super Bowl LIII. 
• Affiliate and subscription fee revenues rose 13%, led by growth in the Company’s direct-to-consumer streaming services, fees from CBS Television Network affiliated stations and retransmission revenues, including from virtual MVPDs. 
• Content licensing and distribution revenues decreased 3%.
• Operating income for the first quarter of 2019 increased to $1.23 billion from $772 million.
• Net earnings for the first quarter of 2019 were $1.58 billion compared with $511 million.