CBS Credits Strong Streaming Sales for Record Quarterly Revenue

Courtesy of Robert Falconer/CBS
Jordan Peele's 'The Twilight Zone' was a high-profile launch for CBS All Access on April 1.

The company also boasted of double-digit revenue growth due to Super Bowl LIII, along with increases in affiliate and subscription fee revenue.

CBS on Thursday reported its best-ever quarterly revenue on surging sales of digital content, though the large number was a tad shy of the expectations of analysts.

CBS was expected to earn $1.36 per share on $4.3 billion revenue, and it said Thursday it earned $1.37 per share in its first quarter on $4.2 billion revenue, news that barely affected the stock after the closing bell.

The company boasted of double-digit revenue growth due to Super Bowl LIII, along with increases in affiliate and subscription fee revenue.

Its direct-to-consumer subscribers grew 71 percent year-over-year, thanks to The Twilight Zone on CBS All Access and Billions on Showtime, CBS said. The company also scored by selling content to Amazon, Apple and Netflix.

Content licensing and distribution was the culprit for missing analyst estimates on the top line.

The earnings report comes as rumors swirl that CBS is looking for a merger partner, the most obvious being Viacom as both are controlled by Sumner Redstone and his daughter, Shari. But Wedbush analyst Dan Ives suggested Apple may want CBS, or a combined CBS-Viacom, for that matter, as it prepares to launch a streaming product that needs lots of content.

On April 23, CBS extended acting CEO Joseph Ianniello for an additional six months without naming him permanent CEO, fueling further speculation that a merger may be in the cards. Ianniello has been running CBS since the ouster of Les Moonves in September.

Ianniello boasted Thursday that streaming is a "core strategy" for CBS, which is a "leader in the space," and he noted that CBS All Access and Showtime will be "anchors" at the upcoming Apple service.

While CBS usually lumps CBS All Access and Showtime together when speaking of its streaming products, Ianniello said the former by itself experienced its "biggest growth ever" during the most recent quarter.

Ianniello noted that CBS at large has now notched 37 straight quarters of earnings-per-share growth. Ad revenue grew 18 percent in the quarter, he said.

Content at CBS All Access has surpassed 10,000 episodes, and that service, combined with Showtime's direct-to-consumer product, are on track to hit 25 million subscribers by 2022, but the company didn't say how many they have now.