CBS Corp. on Thursday afternoon reported results for the third quarter of 2016 that included an 8.7% increase in revenue from its Local Media segment that comprises the CBS Television Stations compared to the first quarter a year ago.
The company said the increase reflected growth in retransmission revenues and higher political advertising sales from upcoming federal and state elections.
“CBS is clearly knocking the cover off the ball, including revenue and profit growth across every one of our operating segments,” said Leslie Moonves, chairman-CEO, CBS Corp. “Our premium content continues to be the driving force behind our success, starting with the CBS Television Network, which kicked off another terrific season as the No. 1 network, with the No. 1 new drama, Bull, and the No. 1 new comedy, Kevin Can Wait. With ownership in all of our new fall shows, we have once again positioned our company to monetize additional content across all platforms for years to come. This includes content licensing and distribution, which benefited from a 40% increase in streaming revenue during the third quarter.
“It also includes affiliate and subscription fees, where retransmission consent and reverse compensation grew 32% during the quarter, and where we continue to see rapid growth in our subscription streaming services, CBS All Access and Showtime OTT.
“Meanwhile, advertising remains strong and is accelerating here in the fourth quarter as our new upfront pricing kicks in and political spending is ramping up nicely. Looking ahead to the separation of our radio business, we see additional opportunities to return value to shareholders and invest in our core content business. So we feel extremely good about our future, and we are confident we have set ourselves up to succeed under any scenario,” he concluded.
Entertainment segment revenues (which include CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive and CBS Films) for the third quarter were $1.95 billion, up 1% from $1.93 billion for the same prior-year period. This increase was led by 39% growth in affiliate and subscription fees, driven by higher station affiliation fees and subscription growth for CBS All Access. Due to 10 hours of primetime preemptions for Democratic and Republican conventions and the first presidential debate as well as competition from the 2016 Summer Olympics, network advertising revenues were down 2% for the third quarter.
Content licensing and distributions revenues were 3% lower than last year’s third quarter, which included the initial domestic availability of Elementary. Growth in domestic streaming sales partly offset this impact. Entertainment operating income for the third quarter of 2016 grew 3% to $348 million from $339 million for the same prior-year period, driven by the increase in revenues.
Cable Networks segment revenues grew 14% to $598 million for the third quarter of 2016 from $526 million for the same prior-year period. The increase was driven by higher revenues from the domestic licensing of Showtime original series, including Penny Dreadful, and growth from Showtime Networks’ over-the-top streaming service.
Cable Networks operating income for the third quarter of 2016 increased 16% to $285 million from $246 million for the same prior-year period, reflecting the revenue growth, which was partly offset by increased investment in original series.
For the company overall, revenues for the third quarter of 2016 increased 4% to $3.40 billion from $3.26 billion for the same prior-year period. The growth was led by a 32% increase in retransmission revenues and fees from CBS Television Network affiliated stations as well as growth from digital distribution platforms. Content licensing and distribution revenues increased 6%, driven by growth in domestic television licensing sales. Advertising revenues during the third quarter were affected by 10 hours of primetime preemptions for Democratic and Republican conventions and the first Presidential debate as well as competition from the 2016 Summer Olympics, while advertising benefited from higher political spending.
Operating income for the third quarter of 2016 increased 6% to $798 million from $753 million for the same prior-year period, reflecting the higher revenues, which were partially offset by increased investment in programming.
Net earnings from continuing operations of $514 million for the third quarter of 2016 rose 21% from $426 million for the same quarter in 2015, and adjusted net earnings from continuing operations increased 10% to $467 million, driven by the higher operating income. EPS from continuing operations for the third quarter of 2016
Read the company’s report here.
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