CBS Beats Analysts’ Estimates on Advertising From NFL

CBS Corp., owner of the most-watched television network, posted third-quarter results that beat analysts’ forecasts, and said it would supply Sony Corp. with shows for a planned Web-based TV service.

Profit rose to 74 cents a share, excluding items, New York-based CBS said today in a statement, beating the 73-cent average of 24 analysts’ estimates compiled by Bloomberg. Revenue rose to $3.37 billion, surpassing estimates of $3.32 billion.

CBS benefited from National Football League games on Thursday nights, which boosted network ratings and ad revenue, and from higher licensing and distribution fees. The company is trying to reach viewers online and through mobile devices, with Web-only products such as the one Sony plans and a 24-hour news network it also announced today.

“As new entrants, they will pay a higher subscription fee than we’ve ever been paid before,” CBS Chief Executive Officer Leslie Moonves said on a conference call. “So just like when telcos came along to compete with cable and satellite, broadband services will help expand the universe of opportunities.”

Advertising sales, CBS’s largest source of revenue, increased 2 percent, according to the company, driven by “Thursday Night Football.” Content licensing and distribution increased 4 percent, lifting non-advertising revenue to more than 50 percent for the first time.

Programming Costs

CBS headed into the new TV season facing higher costs from summer shows like “Extant” and “Under the Dome,” and the new “Thursday Night Football.” While the games helped promote the network’s other shows and contributed to higher ad sales, the costs squeezed margins.

“The real benefit of the NFL platform isn’t the games themselves, but rather as a launch and promotional tool,” wrote David Bank, an analyst at RBC Capital Markets, in a report before the results. The analyst, who recommends buying the stock, predicts margins will begin to expand again next year.

The Internet-based video news service, CBSN, will debut tomorrow. Programmers like CBS are weighing how to reach viewers who don’t subscribe to satellite or cable television, and to counter shrinking conventional TV audiences. Last month, CBS began selling a package of live and library shows online in a $5.99-a-month subscription service.

NFL Ratings

The network’s Thursday football telecasts haven’t met Bank’s forecasts for ratings. They have averaged about 17.1 million viewers a night, according to Nielsen data, to rank among the five most-watched prime-time shows this season. The games are No. 3 in the audience for younger viewers, the group advertisers target.

Prime-time football has contributed to higher ratings for the network overall. CBS is averaging 11.7 million total viewers a night, up 6.4 percent from a year earlier.

CBS, controlled by the 91-year-old billionaire Sumner Redstone, rose as much as 3 percent to $54.05 in extended trading. The stock gained 1 percent $52.50 at the close in New York and has declined 18 percent this year.

Time Warner Inc. earlier today reported quarterly profit and sales that beat analysts’ estimates, benefiting from the higher fees it collects from cable operators for channels like TBS and CNN. Advertising revenue at the Turner division fell 2 percent.

CBS’s net income for the quarter soared to $1.64 billion, or $3.03 a share, including a gain of $1.57 billion from the split-off of the outdoor advertising business. Net income totaled $494 million, or 80 cents, a year earlier.

(A previous version of this story corrected the stock price.)

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE