CBS Profit Climbs 22% on Revenue From Streaming OutletsAndy Fixmer
CBS Corp., owner of the most-watched U.S. broadcast network, reported third-quarter profit growth that met analysts’ estimates, lifted by sales of shows to streaming services from Netflix Inc. and Amazon.com Inc.
Revenue advanced 11 percent to $3.63 billion, beating the $3.53 billion average of analysts’ projections. Income from continuing operations increased 22 percent to $469 million, or 76 cents a share, from $385 million, or 59 cents, a year earlier, New York-based CBS said yesterday in a statement.
“A solid revenue quarter all around, but expenses were a little higher than expected,” Paul Sweeney, a Bloomberg Industries analyst, said in an e-mail. “CBS is leveraged to advertising, retransmission fees and licensing fees -- all of which appear to be trending in the right direction.”
CBS, controlled by Chairman Sumner Redstone, fell 1.7 percent to $58.63 12:32 p.m. in New York. Through yesterday, the shares had increased 57 percent this year.
Chief Executive Officer Leslie Moonves is boosting sales by selling streaming rights to “The Good Wife,” “Under the Dome” and “Dexter,” which played on its Showtime cable network, to Web-based services. CBS is also increasing programming fees it charges pay-TV providers such as Time Warner Cable Inc., the second-biggest U.S. cable system.
Profit matched analysts’ projection for 76 cents, the average of 25 estimates compiled by Bloomberg.
Advertising gained 4.3 percent to $1.86 billion, while licensing and distribution revenue rose 18 percent to $1.1 billion, the company said. Affiliate and subscription fees, including retransmission revenue, jumped 23 percent to $611 million.
CBS stands to gain from changes Nielsen is making to how audiences are counted, Moonves said on a conference call. Nielsen, which produces the ratings broadcasters use to set advertising rates, began counting video-on-demand viewing this season and will start adding audiences on some mobile devices next year.
“We are on the way to monetizing every eyeball that is watching our content,” Moonves said.
The company sold its billboard operations in Europe and Asia to Los Angeles-based private equity firm Platinum Equity LLC for $225 million, resulting in a $147 million gain, according to the statement. The results of those businesses were classified as discontinued operations.
CBS plans to split off its U.S. billboard unit, convert it to a real estate investment trust and sell shares in the new entity.
The company had debt of $6.31 billion and $226 million in cash as of Sept. 30, according to the statement.
Profit at CBS’s entertainment division, which includes the broadcast network, increased 14 percent to $394 million. Sales grew 12 percent to $1.88 billion.
Income at CBS’s cable division, home to its Showtime premium cable channel, rose 15 percent to $255 million on sales that increased 37 percent. Profit from local broadcasting, which includes the company’s TV and radio stations, fell 15 percent to $161 million from a year ago, when the division benefited from political campaign advertising. Revenue dropped 3 percent to $641 million.
CBS’s Simon & Schuster publishing division lifted profit by 7.9 percent to $41 million on sales that gained 6.7 percent to $224 million. The best-selling titles in the quarter included “Doctor Sleep” by Stephen King and “Si-cology 1” by Si Robertson.