CBS Stations Revenue Dips 7% In 3rd Quarter

CBS Corp. on Wednesday reported results for the third quarter of 2015, that included revenue from CBS Television Stations that declined 7% from a year ago.

The company said the decline was the result of the benefit to 2014 from the midterm elections and the broadcast of fewer sporting events on CBS in 2015. Growth in affiliate fees partially offset the decline.

The company’s Local Broadcasting segment revenues of $638 million for the quarter decreased 6% from $680 million in the same prior-year period.

“During the third quarter, we once again grew our profit and EPS while continuing to increase our investment in content and new distribution services,” said Leslie Moonves, president and chief executive officer of CBS Corp. “I’m particularly pleased with the gains we’re seeing in network advertising, including underlying ad growth in the third quarter and even better pricing here in the fourth. Plus, having sold less inventory in the upfront, we stand to benefit throughout this television season as we sell our No. 1 network in a very robust scatter marketplace.

“Add to that CBS’s broadcast of Super Bowl 50 in February and the upcoming presidential election, you can see why we feel very good about advertising in 2016. At the same time, our nonadvertising revenue continues to grow even faster, led by retransmission consent and reverse compensation, which were up 50% in the third quarter and are well on their way to exceeding $1 billion next year.

“Looking ahead, as viewers increasingly want to access and pay for content in new ways, we see continued increases in subscription revenue from our in- house over-the-top services at CBS and Showtime, as well as those from outside distribution partners. The good news is, no matter how quickly the industry changes — from big bundles to ‘skinny’ ones to a la carte — CBS is positioned to succeed.”

The company as a whole reported revenues of $3.26 billion for the third quarter of 2015 compared with $3.37 billion for the same prior-year period, primarily reflecting the timing of television licensing sales and decreases in lower-margin revenues, including the nonrenewal of a sports contract and lower pay-per-view revenues.

Meanwhile, CBS said revenues for this year’s third quarter benefited from growth in underlying network advertising, as well as 9% higher affiliate and subscription fees, including a 50% increase in revenues from retransmission consent and CBS Television Network-affiliated television stations.

Operating income of $753 million for the third quarter of 2015 grew from adjusted operating income of $746 million for the same prior-year period. This increase reflects growth in high-margin affiliate and subscription fee revenues, which were offset by lower profits from television licensing.

Net earnings from continuing operations of $426 million for the third quarter of 2015 rose from adjusted net earnings from continuing operations of $400 million for the same prior-year period. The increase was driven by higher operating income and lower losses from foreign exchange rate changes.

Entertainment revenues rose 1% to $1.93 billion for the third quarter of 2015 compared with $1.91 billion for the same prior-year period, primarily reflecting a 55% increase in affiliate and subscription fees. Network advertising revenues were up 1% despite the broadcast of fewer sporting events on the CBS Television Network. Content licensing and distribution revenues decreased 3%, primarily reflecting the timing of television licensing sales.

Entertainment operating income for the third quarter of 2015 was $339 million, up 12% from $302 million for the same prior-year period, driven by growth in higher margin revenues, which were partially offset by an increased investment in programming and digital distribution initiatives.

Cable Networks revenues for the third quarter of 2015 were $526 million compared with $624 million for the same prior-year period, which included significant domestic streaming sales of Dexter and Californication and higher revenues from pay-per-view boxing events. An increase in affiliate and subscription fees, reflecting growth in rates and revenues from new digital distribution platforms, partially offset the decline.

Cable Networks operating income for the third quarter of 2015 was $246 million compared with $266 million for the same prior-year period, primarily reflecting the lower revenues. The decline was partially offset by lower programming costs that were mainly associated with pay-per-view boxing events.

Read the company’s release here.