CBS Beats Quarterly Earnings Expectations
CEO Les Moonves ups his goals for retransmission and reverse compensation revenue.
CBS reported better-than-expected quarterly earnings on Wednesday and said it took a $55 million charge for restructuring its TV stations business and radio assets, the latter of which suffered layoffs a few weeks ago.
The company earned 74 cents per share while Wall Street expected 72 cents in the second quarter. Revenue came in at $3.22 billion while analysts expected $3.21 billion.
Shares of CBS fell 5 percent Wednesday and slipped an additional 2 percent after the closing bell. Media stocks in general were weak Wednesday, a reaction to Disney announcing Tuesday that growth in its cable TV segment would be slower than previously expected.
Leslie Moonves, the CEO of CBS, was upbeat during a conference call with analysts Wednesday, and he even upped previous predictions: he said that retransmission and reverse compensation would exceed $2 billion by 2020 as opposed to merely reaching that benchmark, and he said it would reach $1 billion in 2016, about a year ahead of his previous prediction.
CBS has the most-watched programming, "and we will get paid the appropriate amount for it," he said.
He said that digital initiatives like CBS All Access have established "much higher" price points for the network's content. He called CBS "a must-have" for over-the-top services and so-called skinny cable bundles.
He also boasted that CBS will have more coverage of live NFL games than any network in history, with Thursday and Sunday games eventually leading to Super Bowl 50.
He was also bullish about political spending on TV ads, which some analysts expect will exceed $4.4 billion for the presidential election next year. Moonves noted that television will attract four times more ad dollars than will the Internet for the upcoming election.
Ailing executive chairman Sumner Redstone was listening in on the conference call but did not speak. In the earnings release, he issued a statement reading: "CBS is at the center of the action during an extremely exciting time in media. We continue to succeed as a result of our world-class content, and Les and his team are positioning the company to prosper in the quarters and years ahead."
In the quarter, affiliate and subscription fees grew 28 percent, driven by Showtime's distribution of the Floyd Mayweather-Manny Pacquiao fight. While it was the highest-grossing pay-per-view boxing event of all time, Moonves quipped that "Mayweather made more money than CBS."
Quarterly revenue of $3.22 billion was up 1 percent over the year-ago quarter and net earnings of $332 million was down 24 percent.