CBS Corp. (CBS), owner of the most-watched TV network, said third-quarter profit increased 16 percent, beating analysts’ estimates on rising income from affiliate fees and sales of reruns.
Net income rose to $391 million, or 60 cents a share, from $338 million, or 50 cents a share, a year earlier, New York- based CBS said yesterday in a statement. Excluding items, profit of 65 cents beat the 60-cent average of 27 estimates compiled by Bloomberg. Sales climbed 1.6 percent to $3.42 billion, compared with the $3.49 billion average projection.
To counter swings in ad sales, Chief Executive Officer Leslie Moonves is seeking fees from pay-TV systems and affiliates that carry the network. He’s also licensing shows to digital outlets including Netflix Inc. (NFLX) and Hulu LLC. Those two areas led the company’s revenue growth, outpacing ad sales.
“Our base businesses continue to be extremely solid performers, and at the same time, we’re growing the size of our overall revenue pie by steadily increasing our non-advertising revenue,” Moonves said on a conference call. “The fact that we were able to achieve these results in an economy that is still recovering is a testament to the remarkable transformation under way at our company.”
With the Super Bowl and a key National Football League playoff game on the schedule in early 2013, CBS is expected to lead audience ratings for the ninth time in 10 years when the current TV season ends in May.
CBS has sold most of its advertising inventory for the Feb. 3 Super Bowl, with some 30-second commercials fetching more than $4 million, Moonves said.
The company may begin providing past seasons of programs that are still on the air to online outlets that include Amazon.com, Moonves said on the call. The company has limited such deals to shows that are off the air.
“It is very attractive,” Moonves said, citing the added income and the potential for higher ratings on the network.
Third-quarter advertising revenue slid 3.1 percent to $1.93 billion, CBS said. NBC aired the summer Olympics during the quarter, attracting more viewers and ad dollars.
CBS said content licensing and distribution revenue totaled $931 million in the period, a 7.9 percent increase from a year earlier, while affiliate and subscription fees climbed 12 percent to $496 million.
The company will recognize the bulk of record political advertising at its TV and radio stations this quarter, Chief Financial Officer Joe Ianniello said on the call.
Operating profit at CBS’s local TV and radio stations climbed 18 percent to $190 million on sales of $661 million. Doug Creutz, an analyst at Cowen & Co. in New York, forecast revenue of $707 million in a Nov. 1 report.
Operating profit at CBS Entertainment, the unit that includes the network, fell 5.5 percent to $346 million on sales of $1.68 billion. Creutz expected sales of $1.67 billion.
Profit at CBS’s cable division rose 12 percent to $221 million as sales increased 3.8 percent to $436 million. The unit, which includes the Showtime premium channel, was expected to report $443 million in revenue, Creutz wrote.
Operating profit at CBS’s outdoor advertising business more than doubled to $45 million on sales of $486 million, while profit at the Simon & Schuster publishing unit rose 5.6 percent to $38 million on revenue of $210 million.
To contact the editor responsible for this story: Anthony Palazzo at firstname.lastname@example.org