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In its first earnings report since The New Yorker alleged that CEO Leslie Moonves sexually harassed women, CBS said Thursday it earned $1.12 per share on a record $3.47 billion in revenue, proving the embattled executive has not yet lost a step when it comes to delivering impressive financial results.
Satisfying Wall Street, though, is easy compared with the other challenge faced by Moonves, given the sex allegations against him have wiped out more than $1 billion in value at CBS and have weakened his leadership to the point where his decisions are subject to second-guessing, perhaps more so now than at any other time in his storied career.
Moonves began a conference call on time Thursday, but a CBS executive warned the CEO would only discuss quarterly earnings and not legal matters, so presumably he wouldn’t comment on the allegations against him. The analysts took the warning seriously, as none of the dozen or so who were afforded a question even broached the subject.
Analysts certainly would like to know if Moonves’ job is safe and what the plan is for succession, and they’d like clarity on whether CBS might merge with Viacom, and if CBS will persist in its lawsuit to dilute the control that Sumner and Shari Redstone have over CBS via their voting shares.
But none of that was addressed on Thursday, either, presumably because analysts figured such inquiries wouldn’t get answered.
Moonves is the subject of an investigation after last Friday’s New Yorker story detailed accounts by six women claiming sexual misconduct over three decades, and the investigation provides Moonves and other CBS executives the cover they need to avoid comment on the allegations until the investigation is complete — likely weeks or months from now.
The CBS board of directors will keep Moonves in his job while his past behavior is investigated by two outside law firms: Covington & Burling and Debevoise & Plimpton.
Analysts were expecting CBS to post $1.11 in earnings per share in the second quarter on revenue of $3.46 billion. Shares of CBS have been mostly in decline since the allegations against Moonves surfaced. They closed 17 cents higher on Thursday at $52.72, but were 19 cents lower after the closing bell.
Ahead of the earnings release, BTIG analyst Richard Greenfield complained that CBS has not allowed him to ask a question on an earnings call in more than eight years, so he published a list of the 10 questions Moonves should answer, including:
Why did CBS cancel its annual meeting twice thus far, robbing shareholders of a vote for new board members?
Is your $69 million compensation for 2017 justified?
With media rushing into greater scale via large mergers, how can CBS flourish on its own?
Greenfield again wasn’t allowed a question on Thursday, so those three issues were not addressed.
“Each of our three revenue types enjoyed solid growth, led by affiliate and subscription fees, where we continue to see healthy gains in both traditional distributions and new digital platforms,” Moonves said in a statement accompanying Thursday’s financial release.
He added that digital streamers CBS All Access and Showtime OTT are growing so rapidly that the goal of 8 million between them by 2020 should be met in 2019, instead.
“Last month, we premiered the controversial Who Is America? from Sacha Baron Cohen, which brought in this year’s biggest number of OTT sign-ups in a single day,” Moonves boasted during Thursday’s conference call.
At local TV stations, political advertising is soaring, and the legalization of sports betting has been a boon, Moonves said.
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