CBS Corp. Second-Quarter Earnings Rise
UPDATED: CEO Leslie Moonves lauds record results and addresses CBS' competitive edge, the Olympics, and why he's not losing sleep over Aereo.
CBS Corp., led by CEO Leslie Moonves, on Thursday reported improved second-quarter earnings despite slightly lower revenue.
The company posted net earnings of $427 million, compared with $395 million in the year-ago period. Operating profit rose 5 percent to $769 million. Revenue declined slightly to $3.48 billion.
"Our record second quarter results reflect CBS’s underlying strength and the ongoing evolution of our business to encompass multiple sources of growing and recurring high-margin revenue," said Moonves. "The good news is, there’s so much more to come, and there are several important events just ahead. The U.S. presidential election will be a major factor in our second half results, and the London Olympics will give a considerable lift to our outdoor business. And as we head into 2013, we will benefit from the Super Bowl, CBS’s success in the upfront marketplace, as well as from a number of hit shows that will be sold into syndication."
The lower revenues were attributed entirely by CBS to reporting revenue from NCAA basketball in the first quarter in 2012 compared to the second quarter in 2011 as well as differences in revenue from a multiyear digital streaming agreement.
“CBS’s content continues to fuel the success of this great company,” said Sumner Redstone, executive chairman and controlling shareholder of CBS Corp. “In a world where great programming commands premium pricing, we continue to hit on all cylinders."
On a conference call after reporting earnings, Moonves touted the fact that the company broke its own records in earnings and operating income since its split from Viacom in 2006.
He also crowed over more than two years of being tops among TV networks in ratings. "This clearly dispels the myth of network cyclicality," he said, adding that CBS has an advantage because with so many hit shows -- it has 12 of the 25 most-watched programs on broadcast television -- there's less production costs to bear on new ones. "We will be adding just 4 new shows while our competitors will be adding many more," said Moonves.
As for advertising sales, CBS reported $2.14 billion in the second quarter, which was roughly the same as the previous year. The automotive sector is highlighted as being especially robust, particularly from Japanese manufacturers. Travel, leisure, and political advertising is also driving ad sales at the company.
The company has high hopes for a record year, boosted by sales for Super Bowl XLVII and its new shows. Moonves says the network is already getting millions of dollars per episode on Elementary and Vegas before either of the series airs.
A few of CBS' shows including The Good Wife and NCIS: Los Angeles are going into syndication, and analysts are being told to expect good things from syndication deals involving Showtime series Dexter and Californication.
Although the Summer Olympics are airing on competitor NBC, Moonves believes it has been great for CBS' outdoor ad business too, saying, "We love to hear all the people who are caught in traffic in the tube and looking at our ads."
Moonves was also asked about whether he fears that Aereo, the digital streaming company backed by Barry Diller, could hurt retransmission fees. The networks all spent a lot of time in court attempting to prove irreparable harm, but now, CBS is downplaying the result of a decision last month by a New York judge to deny an injunction.
"It does not effect any negotiation we have," said Moonves. "It is hardly even brought up...The minor loss we suffered in court, it is not even the first out in the first inning....The people who have cried 'Oh my god, this could hurt retranmission' are really exaggerating greatly. It is not something I lose sleep over even for five minutes."
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