CBS’s Quarterly Profit Beats Estimates on Programming Deals

CBS Corp. (CBS), owner of the most-watched television network, reported fourth-quarter profit that beat analysts’ estimates, helped by new programming agreements, and accelerated its stock buybacks by $1.5 billion.

Net income rose to $470 million, or 76 cents a share, from $393 million, or 60 cents, a year earlier, New York-based CBS said today in a statement. Profit excluding some items was 78 cents a share, exceeding the 76-cent average of 27 analysts’ estimates, according to data compiled by Bloomberg.

CBS, home of police drama “NCIS,” the most watched show on television, is using its ratings dominance to wring money from distributors in so-called retransmission content fees, which allow pay-TV services to provide the network’s signal to subscribers. The network is also licensing more shows to streaming services operated by Amazon.com Inc. and Hulu LLC.

“The beat was overall across segments,” Martin Pyykkonen, an analyst at Wedge Partners, wrote in an e-mail. “Syndication, including streaming, was a key part of revenue and margin growth.”

Sales increased 5.8 percent to $3.91 billion in the quarter, beating the $3.82 billion average of analysts’ estimates.

CBS said today it will buy back a total of $2 billion shares in the current quarter. The total amount spent in the first quarter is almost the same as the company spent on repurchases in 2013, CBS said in a separate statement.

Significant Increase

CBS, controlled by Chairman Sumner Redstone, rose as much as 4.4 percent to $64.59 in extended trading. The shares closed up 1.6 percent to $61.85 in New York. The stock has declined 3 percent this year.

A deal with Time Warner Cable Inc. (TWC), announced on Sept. 2 after a monthlong blackout, represented a significant increase in the monthly fee paid to CBS, almost double that of prior contracts, people with knowledge of the terms said at the time.

Verizon Communications Inc. reached an accord with CBS in August for its FiOS pay-TV system under similar terms, according to Chief Executive Officer Leslie Moonves.

Operating profit at CBS’s entertainment division, which includes the broadcast network, increased 31 percent to $368 million as sales rose 11 percent to $2.21 billion.

“Entertainment did better than I expected,” Brian Wieser, an analyst at Pivotal Research Group, said in an e-mail. “Network advertising was exactly in line with my expectations, suggesting content licensing and distribution was very strong.”

Streaming Rights

During the last quarter, CBS agreed to provide Amazon with streaming rights to episodes of the second season of “Under the Dome.” In January it announced a deal to provide the online retailer with rights to its new sci-fi series from Steven Spielberg called “Extant,” featuring Halle Berry.

Earlier this month, the network agreed to stream past seasons of crime and police dramas “Elementary” and “Blue Bloods” with Hulu.

The company’s local stations, including radio, produced a profit of $236 million, a drop of 20 percent from a year earlier when political advertising bolstered results. Revenue dropped 8.6 percent to $719 million.

The cable division, which includes Showtime, posted a profit of $193 million, a 9.7 percent increase, as sales rose 8.9 percent to $477 million.

CBS also announced an agreement last week with the National Football League to simulcast eight national games on Thursday nights starting in September. The one-year deal can be extended by a year by the NFL, which will also carry the games on the league’s NFL Network cable channel. CBS paid $250 million to $300 million for the rights, according to an estimate by Michael Morris, an analyst at Guggenheim Securities in New York.

(CBS executives will discuss results on a conference call at 4:30 p.m. New York time. To listen, dial +1-888-601-3869 or +1-913-312-1489 for callers outside the U.S.)

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.