CBS Stock Rises as Quarterly Earnings Beat Expectations
CBS All Access and Showtime OTT services are expected to exceed 4 million subscribers by year's end.
CBS on Monday reported record second-quarter revenue and operating income as it grew affiliate fees from both traditional and "skinny" bundles of programming, whereby consumers pay a small fee for just a few dozen or so TV channels.
CBS was expected to earn 97 cents per share on $3.11 billion in revenue in the quarter, but it reported earning $1.04 per share after some adjustments on $3.26 billion in revenue, as retransmission consent and reverse compensation increased 25 percent.
CBS CEO Les Moonves said the return of Twin Peaks led to "a terrific quarter" for Showtime, including boosting subscriptions for the cable network's OTT streaming service. The exec announced Monday that its CBS All Access OTT service, combined with the Showtime OTT product, will exceed 4 million subscribers by the end of the year.
Moonves also announced that the highly touted Aug. 26 fight pitting Floyd Mayweather Jr. against Conor McGregor will not only be shown pay-per-view on Showtime but will also stream on a dedicated website.
In fact, Moonves said CBS will be launching an entire streaming sports channel later this year modeled after CBSN, the company's streaming news service.
Shares of CBS closed 1 percent higher on Monday to $63.62 and were up another 2 percent after the closing bell once its financial results were made public.
Earlier Monday, CBS said it struck a deal with AT&T that will have the telecommunications company carrying CBS, The CW, CBS Sports Network and Showtime on DirecTV Now, the satellite service's streaming product.
Beyond DirecTV Now, CBS also has skinny bundle deals with YouTube TV, Hulu and fuboTV. CBS All Access, which in some ways competes with those, will expand internationally starting with Canada in the first half of 2018, Moonves announced.
Wall Street has been worried about advertising, but the CEO said the basic ad business at CBS is "strong and growing."
Moonves boasted that the ratings for The Late Show With Stephen Colbert are up 35 percent in the era of President Donald Trump, and he said he was excited for upcoming books from Tom Brady and Hillary Clinton from publishing unit Simon & Schuster.
CBS said its advertising revenue grew to $1.3 billion from $1.2 billion a year earlier, while content licensing and distribution was up to $1.1 billion from $943 million and affiliate and subscription fees were up to $848 million from $733 million.
"A lot of money is going into Colbert," Moonves said.
Moonves also took a shot at Netflix when an analyst asked him Monday about the rich way Wall Street values that company compared with CBS.
"We would love to take all of our profit and put it into content," Moonves said. "We'd be very good at that."