CBS Corp. CEO Leslie Moonves Even More Bullish On Advertising Outlook And Company Than Usual
Network ad revenue rises 7%; chairman Sumner Redstone says company "firing on all cylinders"
NEW YORK - CBS Corp. management on Thursday said advertising is nearing pre-recession levels, with president and CEO Leslie Moonves saying ad growth trends continue to be strong in the current fourth quarter and going into 2011.
Acknowledging on his earnings conference call with analysts that he may be even more bullish than he normally is, Moonves said scatter market ad prices for the CBS network are currently up more than 35% over upfront levels, the TV station group is pacing up by more than 20% over last year with strong political ad spending having pushed consumer ads into the current quarter, and radio ad revenue is trending up in the double digit percentage range.
“CBS’s strong momentum continues to grow across our businesses,” said Moonves. “Just as we saw last year, each quarter in 2010 is delivering higher profits than the quarter before," and the current fourth quarter will be the year's strongest in terms of financials, he added. "We see a strong finish to 2010 and a very bright future ahead.”
Looking into 2011, CFO Joe Ianniello predicted that scatter ad prices will remain well above upfront levels due to a strong CBS schedule, said there is more room for advertising to improve, and the company will benefit from higher retransmission consent revenue - already on track for more than $100 million this year - and lower NCAA rights costs.
2010 restructurings and a commitment to maintain cost savings will also help, he said.
Moonves was also asked about current hot topics in the industry. Discussing retransmission consent disputes, such as the recent one between Fox and Cablevision, he said CBS would "urge the government to stay out of this." Whle he keeps hearing about broadcast signals being pulled, he said CBS has struck many deals without causing noise or problems. He also said it was "not our plan to turn CBS into a cable network" as some have suggested.
Asked about a possible NFL lockout in 2011, he said it would "obviously not [be] a good thing." After all, this is "not programming you replace. The NFL is the NFL, and it's very valuable."
Asked whether CBS's Showtime is facing subscriber declines like HBO this year, Moonves said subscribers have continued to rise amid programming improvements.
Asked about a recent suggestion from NBC that it is looking more closely at attracting somewhat older demos than the typical 18-49 year-olds, Moonves said it wa "ironic" that industry folks always made fun of CBS for skewing older and were suddenly changing their arguments now that CBS has gotten stronger in the 18-49 demo. For his money, a 50 year-old is worth more than a 19 year-old when it comes to buying power, he said, but added he likes all viewers as long as they watch CBS.
The media company Thursday afternoon reported improved third-quarter earnings as stronger cable networks and local broadcasting results outweighed weaker entertainment financials.
CBS network advertising revenue increased 7%, but the company lacked the first-cycle U.S. syndication sales of five major titles - Medium, Criminal Minds, Ghost Whisperer, Everybody Hates Chris and Numb3rs - that had boosted the year-ago results.
Quarterly profit rose from $207.6 million in the year-ago period to $317.3 million. Adjusted profit of $245.2 million was up 42%. Adjusted operating profit before depreciation and amortization rose 17% to $667.4 million with gains of 49% at local broadcasting and 33% at cable networks
Revenue of $3.3 billion for the third quarter was down slightly from $3.35 billion. But underlying revenue growth was driven by a 10% gain in advertising, up from 9% in the previous quarter despite tougher year-ago comparisons given that the U.S. economy started improving late last year.
CBS also unveiled a $1.5 billion share buyback program, beginning in January.
Executive chairman Sumner Redstone on Thursday lauded CBS' "extraordinary performance" this year.
On the conference call, he said: "The strength of our content is driving our results." He added: "CBS content is at the top of its game" and "CBS is firing on all cylinders."