Investors hoping for clarity on whether CBS will merge with Viacom may have been disappointed Thursday, though both companies impressed Wall Street with better-than-expected financial reports.
After the closing bell Thursday, CBS said it earned $1.17 per share on revenue of $3.8 billion as digital services Showtime and CBS All Access fueled 13 percent growth in affiliate and subscription revenue. CBS acting CEO Joe Ianniello said the two combined will reach 25 million subscribers by 2022, and he announced that CBS All Access will roll out children’s programming this year with 1,000 episodes of library content that includes Inspector Gadget, The Adventures of Paddington Bear and Heathcliff from DHX Media.
The exec said that CBS All Access also ordered via DHX new seasons of Cloudy With a Chance of Meatballs, produced by Sony Pictures Animation, and new episodes of Danger Mouse via a relationship with Boat Rocker.
Ianniello also announced an accelerated rollout of CBSN Local, the streaming news service. He said nine new markets are coming, putting the service in all 13 major U.S. markets where CBS has local news operations.
CBS said it set a second-quarter record for revenue, adjusted operating income and adjusted diluted earnings per share. Despite beating the expectations of analysts, shares of CBS were about flat after the closing bell after having risen 3 percent in regular trading.
Several hours earlier, Viacom said its channels improved their ad sales while its Paramount Pictures grew its bottom line for the 10th straight quarter, news that spurred a 4 percent rally of its shares.
The CBS-Viacom merger discussions, though, remain underway while many had hoped they’d be wrapped up in time for both companies to meaningfully address the situation while discussing their financial reports. Now, insiders say a decision is likely a week or more away. Executives from CBS and Viacom both said on their earnings calls that they would not discuss merger speculation.
Earlier Thursday, CBS said it settled a carriage dispute with DirecTV, the satellite service owned by AT&T. The new agreement ends a blackout that began July 20 and comes just in time for the NFL season. It will keep 26 CBS-owned stations, as well as CBS Sports Network, on DirecTV for an undisclosed number of years.
CBS said all four segments — entertainment, cable networks, publishing and local media — scored gains in revenue, but that operating income at cable fell to $185 million compared with $245 million in the same quarter last year.
The 24 percent decrease there is owed to lower licensing fees and an increase in programming, including the premieres of City on a Hill and The Loudest Voice, the latter being a limited series based on Roger Ailes, the former head of Fox News.
“Advertising grew 7 percent and we have continued momentum as we head into the back half of the year, thanks to another robust upfront with solid gains in pricing,” Ianniello said.
“Content licensing also had a very strong quarter, up 12 percent as we continue to build a lucrative portfolio by creating must-have programming for our content brands in addition to highly successful content for third-party platforms,” he said.
Ianniello called it a “high-class” problem to decide whether to license content to competitors rather than horde it all for its own networks and streaming services. Streaming is “like pushing a snowball downhill — it’s getting bigger and bigger,” he said.
