CBS Outpaces Quarterly Earnings Expectations on Strong Political Advertising

Leslie Moonves - H - 2016

Negotiations to possibly merge with Viacom are in the "very early stages," CBS chief Leslie Moonves said.

CBS said Thursday that it earned an adjusted $1.05 per share in the most recent quarter, up from 88 cents a year ago and seven cents more per share than Wall Street had anticipated, and some of the credit goes to political advertising.

Revenue came in at $3.4 billion, while analysts expected $3.34 billion. Last year in the same quarter, CBS reported $3.26 billion in revenue.

"CBS is clearly knocking the cover off the ball, including revenue and profit growth across every one of our operating segments," said CEO Leslie Moonves.

Shares of CBS were rising in after-hours trading.

The TV conglomerate's third-quarter results come as the company is analyzing whether it should merge with Viacom.

Viacom and CBS, of course, share the same chairman emeritus in Sumner Redstone, who controls both companies via his National Amusements holding company.

A bitter power struggle at Viacom resulted in the ousting of Philippe Dauman as CEO, replaced by Tom Dooley, who steps down Nov. 15, to be replaced by Bob Bakish in an acting-CEO capacity.

Moonves is probably in line to run a combined CBS-Viacom and, in fact, Bakish's contract stipulates that he'll serve as CEO at Viacom until he is replaced by the board or until "the closing of any business transaction between Viacom and CBS."

On a conference call with analysts on Thursday, Moonves said negotiations with Viacom are in the "very early stages" and added, "We will only do a deal if it is in the best interest of CBS and its shareholders."

As for political advertising, Moonves said he has seen "spending like we've never seen before," though mostly for down-ballot issues and candidates rather than ads for presidential candidates Hillary Clinton and Donald Trump.

That said, spending for this presidential election cycle is up a whopping 74 percent compared to four years ago when Barack Obama beat Mitt Romney.

Moonves, though, highlighted mostly local spending, like on propositions in California and advertising for the Senate race in Pennsylvania, which he said will mark the biggest ad spend in the history of Senate races.

The exec said that Stephen Colbert has hit his stride as a late-night TV host during this election cycle, noting he got millions of people to live-stream his video of kittens watching the vice presidential debate.

Moonves called James Corden's Carpool Karaoke "brilliant" and said the online videos have been viewed 2 billion times.

He promised that next year's Twin Peaks will be "just as provocative and entertaining as the first one," which aired on ABC from 1990-1991.

The CEO said he hopes to have a deal "fairly quickly" for NFL games on CBS All Access, the company's online offering.

He also congratulated 21st Century Fox on doing so well with a seven-game World Series. "Damn them," he joked.