CBS Beats Quarterly Earnings Expectations as Retransmission Revenue Soars

Leslie Moonves - Getty - 2016
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Chief executive Leslie Moonves said Thursday during a conference call that All Access and Showtime OTT have more than 2 million subscribers between them.

CBS on Thursday exceeded the expectations of analysts when it reported quarterly profit of 93 cents per share on $3.29 billion in revenue, buoyed by 44 percent growth in revenue generated by retransmission fees.

Wall Street expected CBS to earn 86 cents per share on $3.21 billion in revenue in the second quarter. A year ago in the same quarter, CBS posted 74 cents per share on revenue of $3.2 billion.

The company said it did well with its digital distribution platforms, CBS All Access and Showtime OTT, and its content licensing business benefited from international deals related to its library of more than 700 episodes in the Star Trek franchise.

Chief executive Leslie Moonves on Thursday disclosed during a conference call that All Access and Showtime OTT have more than 2 million subscribers between them.

Earlier Thursday, Moonves and the rest of the board of directors approved an increase in its share buyback program to $6 billion and voted to raise its quarterly dividend an additional 20 percent to 18 cents per share.

Moonves said Thursday he anticipates "a significant lift next year with the launch of our new Star Trek series on CBS and Twin Peaks on Showtime."

In fact, Star Trek: Discovery, the first TV show developed specifically for All Access, has been licensed to Netflix in so many territories outside the U.S. that it is already profitable, even though production hasn't yet started, Moonves told analysts Thursday.

Of Star Trek's future generally, he said: "We have spinoffs of spinoffs" — presumably on the drawing table, though he wasn't specific.

Moonves boasted that CBS "continues to fire on all cylinders," with record earnings per share on a diluted basis this time around and 26 quarters of earnings-per-share growth.

He said a recent sale of a series to Apple based on the "Carpool Karaoke" segment on The Late Late Show with James Corden represents "a significant new buyer" for CBS.

Moonves called Corden a "phenomenon" and said he and Stephen Colbert have made late-night television "considerably more profitable" for CBS.

The CEO also predicted a record year for political advertising this year, as Democrat Hillary Clinton squares off against Republican Donald Trump for U.S. president.

When an analyst asked Moonves about persistent rumors that CBS could merge with Viacom, both of which are controlled by ailing media mogul Sumner Redstone, the CEO demurred. He did acknowledge, however, that CBS considered purchasing Starz before Lionsgate agreed to acquire it for $4.4 billion.

"We feel like we're dealing from a position of strength," Moonves said about his attitude toward mergers and acquisitions in general.