CBS Stations Revenue Dip 3% In First Quarter

CBS Corp. on Thursday reported results for the first quarter of 2015, including its highest-ever net earnings from continuing operations per diluted share (EPS).

The company’s Local Broadcasting segment revenues of $596 million for the first quarter of 2015 decreased 5% from $626 million in the same prior-year period. The decline was due to lower advertising revenues, particularly from the entertainment and retail industries, and was partially offset by growth in affiliate and subscription fee revenues. CBS Television Stations revenues were down 3%, and CBS Radio revenues decreased 7%.

Local Broadcasting operating income for the first quarter of 2015 declined 10% to $161 million from $179 million for the same prior-year period, primarily reflecting lower revenues.

“There are tremendous opportunities afforded to companies that create premium programming, and Les and his team are capitalizing on all of them,” said Sumner Redstone, executive chairman, CBS Corporation. “I am confident they have the strategy to keep CBS at the top of its game for many years to come.”

“CBS turned in another quarter of record EPS, and our investment in world-class content will lay the foundation to drive future profits,” said Leslie Moonves, president-CEO, CBS Corp. “We are set to close the season with four of the top five new scripted series, all of which we have ownership in and can monetize in a growing number of ways. We will also win the season as the most-watched network in America, with a solid performance across all demographics at a time when others are facing ratings erosion.

“Looking ahead, we will continue to build upon our position of great strength with a new primetime lineup that we will announce next week, and we expect to be No. 1 in the upfront marketplace as well. At the same time, our premium content is also driving growth in our non-advertising revenue sources.

We had terrific first-quarter results in streaming, both internationally and domestically, as well as retransmission consent and reverse compensation, which are steadily making their way toward $2 billion in revenue by 2020 if not before.

“In addition, our online news channel, CBSN, and our over-the-top service, CBS All Access, are exceeding expectations. We have already expanded CBS All Access to more than half of the country, and we expect it to be offered to 75% of all households by year’s end. As we continue to find new ways to monetize our content, our investment in programming will pay off well into the future, and we remain as committed as ever to returning value to our shareholders.”

Overall, CBS Corp. revenues were $3.5 billion for the first quarter of 2015 compared with $3.57 billion for the same prior-year period. The quarter was affected by the broadcast of one fewer National Football League playoff game on the CBS Television Network and lower advertising revenues at the company’s Local Broadcasting segment. Content licensing and distribution revenues decreased 4%, while affiliate and subscription fees increased 11%, driven by growth in rates.

Operating income was $702 million for the first quarter of 2015 compared with $791 million for the same prior-year period, reflecting a higher investment in sports and entertainment programming.

Net earnings from continuing operations were $394 million for the first quarter of 2015 compared with $462 million for the same prior-year period as a result of the lower operating income. EPS was a record for the quarter at $.78 compared with $.77 for the same quarter in 2014. Weighted average shares outstanding were 506 million in this year’s first quarter, down from 600 million in the prior-year period.

Entertainment segment (CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive, and CBS Films) revenues were $2.26 billion for the first quarter of 2015 compared with $2.30 billion for the same prior- year period, when the CBS Television Network aired one additional NFL playoff game. Higher affiliate and subscription fee revenues from growth in rates offset a decline in content licensing and distribution revenues.

Entertainment operating income for the first quarter of 2015 was $346 million compared with $420 million for the same prior-year period, reflecting a higher investment in sports and entertainment programming.

Cable Networks segment (Showtime Networks, CBS Sports Network, and Smithsonian Networks) revenues were $539 million for the first quarter of 2015 compared with $537 million for the same prior-year period. Higher revenues from growth in affiliate rates and from the international licensing of Showtime original series offset lower domestic licensing revenues as the first quarter of 2014 included a significant domestic streaming sale of Dexter.

Cable Networks operating income for the first quarter of 2015 of $251 million decreased 1% from $254 million for the same prior-year period, reflecting higher operating expenses, mainly from the timing of theatrical programming.