CBS Tops Estimates as ‘Star Trek’ Deals Counter Dip in Ads

  • Online streaming services surpass 2 million subscribers
  • Showtime revenue declines after big prize fight last year

CBS Corp., owner of the most-watched U.S. TV network, posted second-quarter results that beat analysts’ estimates as licensing deals for “Star Trek” boosted revenue and countered a drop in ad sales.

Earnings rose to 93 cents a share, New York-based CBS said Thursday in a statement, exceeding the 86-cent average of analysts’ estimates compiled by Bloomberg. Revenue rose 2.1 percent to $3.29 billion, compared with the $3.21 billion seen by analysts.

The rise in sales of shows to other broadcasters outweighed falling TV ad sales, along with lower subscription revenue at Showtime, where results were buoyed last year by the Floyd Mayweather-Manny Pacquiao prize fight. CBS was also helped by a 44 percent increase in fees from affiliated stations.

“All of these high-margin revenue streams will become an even bigger part of our revenue mix next year,” Chief Executive Officer Les Moonves said in the statement.

CBS was little changed in extended trading after the announcement. The stock rose 0.2 percent to $54.21 at the close in New York and is up 15 percent this year.

  • Revenue from CBS’ entertainment division rose 9 percent despite tough comparisons from last year, when the network carried the college basketball championship game. 
  • Cable network revenue fell 13 percent to $536 million.
  • Ad revenue slipped 2.6 percent to $1.55 billion.
  • Content licensing grew 16 percent to $733 million.

With the rise in Internet advertising and investor concerns about the shrinking audiences for live TV, CBS has focused on international licensing, more online subscriber revenue and affiliate fees to sustain growth in sales. 

CBS’s online streaming services, All Access and Showtime, have amassed more than 2 million subscribers between them, Moonves said on a call with analysts. They are well on their way to meeting the company’s projections of 8 million combined subscribers by 2020, benefiting from new iterations of “Star Trek” and “Twin Peaks.”

That “Star Trek” series will appear on All Access in the U.S. and on Netflix Inc.’s streaming service overseas under a deal that Chief Operating Officer Joe Ianniello described as lucrative. The “Star Trek” deal was one of two between CBS and Netflix in recent weeks -- the other for shows from the CW network, a joint venture with Warner Bros. 

CBS also agreed to produce a spinoff of its Carpool Karaoke late-night skit for Apple Inc.’s music-streaming service.

“The ways we can marry premium content with new technology are growing every day,” Moonves said. He also said the TV advertising market is stronger than the latest results indicate, pointing to double-digit growth in advance bookings for the 2016-2017 television season.

CBS plans to spin off its radio division, much like it did with its outdoor advertising group, and buy back more stock. The moves have made the company more reliant than ever on continued growth from its two premium brands: CBS and Showtime.

Earlier Thursday, CBS raised its quarterly dividend by 20 percent to 18 cents a share, payable on Oct. 1, and expanded its stock buyback authorization to $6 billion. The company had about $1 billion left on a previous repurchase.

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