QUARTERLY REPORT

CBS Stations 1Q Revenue Climbs 18%

Increases in political, retrans and carriage of Super Bowl 50 were drivers. Looking ahead, CEO Les Moonves says “we are in a very enviable position for this year's upfront, given the ongoing strength of our primetime lineup and a robust advertising marketplace. Plus, advertising is poised for even more growth in the back half of the year as political spending ramps up.” He adds that retrans is expected to surpass $1 billion this year.

 

CBS Corp. on Thursday reported results for the first 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 increase reflected the broadcast of Super Bowl 50 on CBS, higher political advertising sales and growth in retransmission consent revenues. 

The company’s Local Broadcasting segment revenue of $649 million for the first quarter of 2016 were up 9% from $596 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 first quarter of 2016 increased 28% to $206 million from $161 million or the same prior-year period. The increase was driven by higher revenues as well as lower expenses as a result of restructuring activities the company put in place to create efficiencies. 

“CBS delivered a spectacular quarter as we continue to execute on our strategy of creating and distributing the content that audiences have to have,” said Leslie Moonves, chairman-CEO, CBS Corp. “We had double-digit revenue growth, and we set records in all key profit measures, with EPS coming in above a dollar for the first time in our Company’s history. Advertising was extremely strong, growing 31% overall and 49% at the CBS Television Network, where we are on track to win the season in adults 25-54 and adults 18-49, as well as in viewers for the 13th time in 14 years.

“Looking ahead, we are in a very enviable position for this year’s upfront, given the ongoing strength of our primetime lineup and a robust advertising marketplace. Plus, advertising is poised for even more growth in the back half of the year as political spending ramps up. Our high-margin, non-advertising revenue streams are also on the rise, led by retransmission consent fees and reverse compensation, which are expected to surpass $1 billion this year. At the same time, our subscription streaming services, CBS All Access and Showtime over-the-top, are reaching new and younger audiences and are beginning to make a meaningful contribution to our results.

BRAND CONNECTIONS

“As we grow our company on the strength of our premium content, we are also moving forward with our initiative to separate our radio business, which will unlock value for shareholders and further diversify our revenue streams. So across the board, we are turning in record results while we position the company for long-term growth. It clearly continues to be a terrific time to be a CBS investor.”

Entertainment segment revenues (which include CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive and CBS Films) rose 14% to $2.59 billion for the first quarter of 2016 compared with $2.26 billion for the same prior-year period. Advertising revenues for the CBS Television Network grew 49%, driven by the broadcast of Super Bowl 50 and additional NFL games as well as 12% growth in underlying advertising. Additionally, affiliate and subscription fees grew 67% for the first quarter. These increases were partially offset by lower content licensing and distribution revenues as the first quarter of 2015 benefited from significant domestic licensing sales of NCIS and CSI.

Entertainment operating income for the first quarter of 2016 was $449 million, up 30% from $346 million for the same prior-year period, driven by revenue growth.

Cable Networks (Showtime Networks, CBS Sports Network, and Smithsonian Networks) revenues for the first quarter of 2016 were $525 million compared with $539 million for the same prior-year period, which included the initial benefit from a significant multiyear licensing agreement with Bell Media in Canada. Revenue growth from new digital distribution platforms partially offset the decline.

Cable Networks operating income for the first quarter of 2016 was $228 million compared with $251 million for the same prior-year period, primarily reflecting lower international licensing revenues and incremental costs associated with the 2016 series premiere of Billions on Showtime.

For the company overall, revenues for the first quarter of 2016 increased 10% to $3.85 billion from $3.50 billion during the same prior-year period. Advertising revenues grew 31%, driven by the CBS Television Network’s broadcast of Super Bowl 50 and additional National Football League games, as well as a 12% increase in underlying network advertising. Affiliate and subscription fee revenues rose 15%, driven by 42% growth in retransmission revenues and fees from CBS Television Network affiliated stations, as well as revenues from new digital distribution platforms. Content licensing and distribution revenues declined 29%, reflecting the timing of domestic and international television licensing sales.

For the first quarter of 2016, operating income of $821 million grew 14% from $721 million for the same prior-year period, and adjusted operating income of $812 million was up 16% from $702 million. In both cases, the increases reflected the company’s first-quarter revenue growth.

Net earnings of $473 million for the first quarter of 2016 rose 20% from $394 million for the first quarter of 2015, and adjusted net earnings of $474 million grew 21% from $391 million in the same prior-year period. The increases were driven by the company’s higher operating income and lower losses from foreign exchange rate changes.

Read the company’s report here.


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