CBS Exceeds Quarterly Earnings Expectations

Leslie Moonves - Getty - 2016
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"Advertising is poised for even more growth in the back half of the year as political spending ramps up," said Les Moonves, the company's CEO.

On the back of strong ratings and ad sales — as well as Super Bowl 50 — CBS exceeded quarterly earnings expectations by reporting $1.02 in per-share profit on $3.85 billion in revenue.

The company was expected to earn 93 cents per share on $3.8 billion revenue in the quarter.

The stock was up 2 percent in after-hours trading on Tuesday, though it fell 1 percent during the regular session.

CBS said business was so strong that even without the Super Bowl and other NFL games, advertising sales would have grown 12 percent.

The conglomerate's "entertainment" segment posted $2.6 billion in revenue, up from $2.3 billion in the year-ago quarter, while "cable networks" lost ground, posting $525 million in revenue, down from $539 million.

Local broadcasting came in at $649 million in revenue, up from $596 million, and publishing was flat at $145 million.

The company is in the process of separating itself from its radio business, likely by way of an initial public offering, but a sale to an interested party is also possible.

"We had double-digit revenue growth, and we set records in all key profit measures, with earnings per share coming in above $1 for the first time in our company's history," said CBS CEO Les Moonves.

"Advertising was extremely strong, growing 31 percent overall and 49 percent at the CBS Television Network, where we are on track to win the season in adults 25-54 and adults 18-49, as well as in viewers for the 13th time in 14 years," he said.

On the whole, advertising revenue in the quarter was $2.3 billion, up from $1.8 billion a year earlier, and Moonves expects the positive ad trends to continue. 

"Looking ahead, we are in a very enviable position for this year's upfront, given the ongoing strength of our primetime lineup and a robust advertising marketplace," he said. "Plus, advertising is poised for even more growth in the back half of the year as political spending ramps up."

Revenue from affiliate and subscription fees rose to $722 million from $628 million last year, while content licensing and distribution revenue fell to $729 million from $1 billion a year ago.

During a conference call with analysts, Moonves said that "the scatter market is as hot as it has been in many, many years" and that CBS is "salivating" at the thought of big upfront sales.

Moonves also predicted that an NCAA basketball contract running through 2032 would be profitable "every single year" for CBS.

"CBS's revenue growth is notable as it is bucking the broader trend among large media, given its top performance among viewers at its broadcast network and strong scatter market ad demand in an anemic GDP environment," said Neil Begley of Moody's.