CBS Profit Increases 80% on Sales of Reruns, Pay-TV Fee

CBS Earnings
The CBS studios in New York. Photographer: Michael Nagle/Bloomberg

CBS Corp., owner of the most-watched television network, said first-quarter profit climbed 80 percent on sales of reruns and higher fees from pay TV systems.

Net income rose to $363 million, or 54 cents a share, from $202 million, or 29 cents, a year ago, New York-based CBS said today in a statement. Excluding items, profit was about 54 cents, exceeding the 44-cent average of 27 analysts’ estimates compiled by Bloomberg.

CBS’s television network and stations are increasing revenue through fees cable systems pay to carry their signals. The fees almost doubled to $60 million in the period, Michael Morris, an analyst at Davenport & Co., wrote in a report today. The network is also collecting a larger share of the cable fees paid to its affiliate stations, he said.

“We see this as a significant ongoing growth opportunity that remains under appreciated in the current consensus estimates and market valuation,” wrote Morris, who recommends buying the shares.

Revenue climbed 12 percent to $3.92 billion, exceeding the $3.78 billion average of 24 analysts’ estimates. Results for the quarter included an after-tax $16 million gain from early retirement of debt and an after-tax impairment expense of $14 million, the company said.

Advertising sales increased 8 percent at the network. TV station revenue rose 2 percent while radio station revenue declined by the same percentage. Revenue from the outdoor billboard unit gained 1 percent.

Money from syndication, the sale of reruns to other broadcast and cable programmers, climbed 39 percent. In the period, CBS agreed to provide non-exclusive rights to “CSI: Miami” to AMC Networks Inc. for about $80 million, Morris estimated.

CBS, controlled by Chairman Sumner Redstone, rose 2.2 percent to $34.16 in extended trading. It gained 0.1 percent to $33.42 at the close of trading in New York and is the top performer of the past year in the 16-stock S&P 500 Media Index with a gain of 33 percent.

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