CBS Corp. on Thursday afternoon reported results for the second quarter of 2016 that included an 18% increase in revenue from CBS Television Stations compared to the first quarter a year ago.
The company said the decrease reflected the absence of CBS’s broadcast of the NCAA Tournament finals that was not offset by growth in retransmission consent revenues.
The company’s Local Broadcasting segment revenue of $647 million for the quarter were down 1% from $654 million in the same prior-year period. (The Local Broadcasting numbers include the CBS Television Stations and CBS Radio.)
Local Broadcasting operating income for the second quarter of 2016 grew 7% to $212 million from $198 million for the same prior-year period. The increase was the result of restructuring activities put in place during 2015, CBS said.
“CBS turned in another terrific quarter, on the way to another outstanding year, as we continue to take advantage of all the growth catalysts before us,” said Leslie Moonves, CBS chairman-CEO. “Our base business is very healthy, including our strongest upfront selling season in years, which will benefit us beginning in late September when the new higher pricing takes effect.
“At the same time, we continue to build our fast-growing, high-margin revenue streams at a rapid clip. During the quarter, retransmission consent and reverse compensation grew 44% and remain on track to surpass $1 billion in revenue this year.
“Our over-the-top streaming services, CBS All Access and Showtime OTT, continue to exceed expectations, and we anticipate a significant lift next year with the launch of our new Star Trek series on CBS and Twin Peaks on Showtime.
“Our content licensing business also had a great quarter and was up 16% thanks to lucrative international deals for our Star Trek library programming that will continue to benefit us as new episodes launch in January. All of these high-margin revenue streams will become an even bigger part of our revenue mix next year when we expect to complete the separation of our radio business and intensify our focus on our core content strategy.
“Looking ahead, we will continue to invest first and foremost in premium content while using excess cash to return capital to our investors. We will take advantage of every opportunity that is in the best interest of our shareholders, and we are more confident than ever in our long-term growth prospects.”
Entertainment segment revenues (which include CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive and CBS Films) rose 9% to $1.95 billion for the second quarter of 2016 compared with $1.79 billion for the same prior-year period. Content licensing and distributions revenues grew 19%, driven by higher international television licensing revenues, mainly from sales of Star Trek library programming.
Affiliate and subscription fees increased 59%, reflecting higher station affiliation fees, retransmission revenues, and subscription growth for CBS All Access. Advertising revenues declined 3%, reflecting the absence of the broadcast of the NCAA Tournament finals on CBS and the impact from the sales of internet businesses in China during 2015, which were partially offset by 2% underlying network advertising growth.
Cable Networks revenues for the second quarter of 2016 were $536 million, down 13% from the same prior-year period which included revenues from the Floyd Mayweather/Manny Pacquiao boxing event, the highest-grossing pay-per-view event of all time. This boxing event affected the revenue comparison by 24 percentage points. Underlying results reflect higher revenues from domestic and international licensing of Showtime original series and 5% growth in affiliate and subscription fees, driven by Showtime Networks’ over-the-top streaming service.
For the company overall, revenue increased 2% to $3.29 billion from $3.22 billion for the same prior-year period.
Operating income for the second quarter of 2016 increased 25% to $733 million from $586 million for the same prior-year period, driven by growth in higher-margin revenues, and rose 14% from adjusted operating income of$641 million for the second quarter of 2015.
Net earnings of $423 million for the second quarter of 2016 rose 27% from $332 million for the same quarter in 2015, driven by the higher operating income, and increased 16% from adjusted net earnings of $365 million for the second quarter of 2015.
Read the company’s report here.
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