CBS Quarterly Earnings a Mixed Bag
The company's results will be closely scrutinized given the trend toward cord-cutting, cord-shaving, skinny bundles and digital services that are competing with traditional television.
In quarterly financial results that many on Wall Street view as a state-of-the-industry report for television, CBS on Tuesday reported 88 cents in per-share earnings on $3.26 billion revenue, results that topped expectations for profit though not for sales.
CBS was expected to earn an adjusted 81 cents per share, up from 74 cents in the year-ago frame. Revenue was predicted at $3.27 billion, down from $3.37 billion last year.
The company's results will be closely scrutinized given the trend toward cord-cutting, cord-shaving, skinny bundles and digital services that are competing with traditional television. The company, in fact, has launched its own online product, CBS All Access.
In regular trading on Tuesday, shares of CBS rose 1 percent to $48.24 and they were down 2 percent after the closing bell once its third-quarter results were released.
CBS CEO Les Moonves said the company is poised for big things in the current and future quarters, given that the advertising scatter market is strong and the network has more inventory to sell because of weaker-than-expected upfronts.
"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," Moonves said.
"At the same time, our non-advertising revenue continues to grow even faster, led by retransmission consent and reverse compensation, which were up 50 percent in the third quarter and are well on their way to exceeding $1 billion next year," he added.
Sumner Redstone, the ailing executive chairman who stopped speaking on earnings conference calls about a year ago, said in a statement Tuesday: "Thanks to the strength of our great content, CBS continues to have a winning hand. Les and his team are capitalizing on all of the opportunities before us, and I'm confident they are setting the company up for continued long-term growth."
In a conference call with analysts, Moonves expressed confidence that CBS will always be part of a skinny bundle, and he added: "The dire predictions of cord-cutting are overblown."
Moonves also boasted that the company is poised to "live long and prosper," a nod to Monday's announcement that a new Star Trek series is in the works for CBS All Access. He predicted Tuesday that "millions" will subscribe to CBS All Access in order to see the new show.
"All Access is a major priority for us," he said.
He said there are "conversations" with the NFL about putting pro football games on All Access, "and they are positive," though nothing is imminent.
All Access charges $5.99 per month and the service includes on-demand shows as well as some live TV, both with commercials, but Moonves said he is considering offering the product ad-free for $9.99 per month.
As for its financial results, despite the company's bullishness on advertising, CBS took in less in that category during the quarter than it did a year earlier, with revenue of $1.48 billion compared with $1.55 billion.
CBS grew revenue in both its biggest and its smallest segment: publishing reported $203 million, up from $199 million; while entertainment came in at $1.93 billion compared to $1.91 billion.
As for the other two segments, cable networks fell to $526 million from $624 million and local broadcasting sunk to $638 million from $680 million.
Moonves said he expects advertising around the presidential campaign to be "huge."
"We encourage all 19 candidates from both parties to hang in there as long as they can," he said.