CBS Corp. Posts 10-Percent Rise in Q1 Revenues

NEW YORK: For the first quarter of 2016, CBS Corporation saw its revenues increase 10 percent to $3.85 billion, as ad revenues grew 31 percent thanks in large part to Super Bowl 50.

Q1 also saw a 12 percent increase in underlying network advertising. Affiliate and subscription fee revenues rose 15 percent, driven by 42-percent growth in retransmission revenues and fees from CBS Television Network affiliated stations, as well as revenues from new digital-distribution platforms. Content licensing and distribution revenues were down 29 percent, largely due to the timing of domestic and international television licensing sales.

Operating income was at $821 million for Q1, a gain of 14 percent, while adjusted operating income of $812 million was up 16 percent.

Net earnings were up 20 percent to $473 million, and adjusted net earnings of $474 million grew 21 percent. The increases were driven by the company’s higher operating income and lower losses from foreign exchange rate changes.

Entertainment revenues grew 14 percent to $2.59 billion. Advertising revenues for the CBS Television Network were up 49 percent, driven by the broadcast of Super Bowl 50 and additional NFL games. Affiliate and subscription fees grew 67 percent for the first quarter. These increases were partially offset by lower content licensing and distribution revenues as the first quarter of 2015 benefited from significant domestic licensing sales of NCIS and CSI. Entertainment operating income was $449 million, up 30 percent.

Cable Networks revenues were $525 million, down from the $539 million reported for the same prior-year period, which included the initial benefit from a significant multiyear licensing agreement with Bell Media in Canada. Revenue growth from new digital distribution platforms partially offset the decline. Cable Networks operating income was $228 million, compared with $251 million for the same prior-year period, primarily reflecting lower international licensing revenues and incremental costs associated with the series premiere of Billions on Showtime.

Meanwhile, local broadcasting revenues of $649 million were up 9 percent, with an 18-percent increase at CBS Television Stations, reflecting the broadcast of Super Bowl 50 on CBS, higher political advertising sales, and growth in retransmission revenues. These increases were partially offset by lower radio revenues, which decreased 2 percent. Publishing revenues of $145 million were flat with the same prior-year period.

“CBS delivered a spectacular quarter as we continue to execute on our strategy of creating and distributing the content that audiences have to have,” said Leslie Moonves, the chairman and CEO of CBS Corporation. “We had double-digit revenue growth, and we set records in all key profit measures, with EPS coming in above a dollar for the first time in our company’s history. 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 to 54 and adults 18 to 49, as well as in viewers for the 13th time in 14 years. Looking ahead, we are in a very enviable position for this year’s Upfront, given the ongoing strength of our prime-time lineup and a robust advertising marketplace. Plus, advertising is poised for even more growth in the back half of the year as political spending ramps up. Our high-margin, nonadvertising revenue streams are also on the rise, led by retransmission consent fees and reverse compensation, which are expected to surpass $1 billion this year. At the same time, our subscription streaming services, CBS All Access and Showtime over-the-top, are reaching new and younger audiences and are beginning to make a meaningful contribution to our results. As we grow our company on the strength of our premium content, we are also moving forward with our initiative to separate our radio business, which will unlock value for shareholders and further diversify our revenue streams. So across the board, we are turning in record results while we position the company for long-term growth. It clearly continues to be a terrific time to be a CBS investor.”