CBS Corp. Profit Slips

NEW YORK: CBS Corporation posted second-quarter earnings that were down 7 percent, impacted by softer advertising sales and lower program licensing fees.

For the quarter ended June 30, CBS reported net income of $439 million, compared to $472 million in the year-ago period. Revenue was down by 5.4 percent to $3.2 billion. The lower revenue was due in part to a shift of the semifinals of the NCAA men's basketball tournament to the Turner networks owned by Time Warner in 2014 (they aired on the CBS Television Network the prior year).

Entertainment revenues—from CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Films and CBS Interactive—were $1.84 billion in Q2, compared with $2.01 billion for the same period a year ago. This was the result of lower TV licensing revenues from the timing of sales as well as lower advertising revenues during the quarter. The lower ad revenues also stemmed from the absence of the semifinals of the NCAA tournament. An increase in affiliate and subscription fee revenues helped to partially offset the revenue decline.

Revenues at the cable networks, including Showtime and Smithsonian Networks, were down slightly to $516 million. Higher affiliate revenues were offset by lower licensing revenues associated with the timing of international sales. The increase in affiliate revenues was led by higher rates at Showtime Networks, CBS Sports Network and Smithsonian Networks, as well as growth in telco subs.

Local broadcasting revenues were also down, from $698 million in Q2 2013 to $655 million in the current Q2. This was primarily a result of a soft ad market.

"CBS's strategy of producing premium content across its businesses and all around the world is the cornerstone of our continued success," said Sumner Redstone, the executive chairman of CBS Corporation. "Regardless of the media landscape, and regardless of the means of distribution, great content will always be king. Les and his team are keenly aware of this fact, and I have full confidence in their ability to manage this company through these times of change and opportunity."

"Our high-margin, fast-growing revenue streams continue to drive EPS, and they stand to become an even bigger factor in our growth going forward thanks to two recent major events," said Leslie Moonves, the president and CEO of CBS Corporation. "First, we completed the separation of CBS Outdoor, which makes us less dependent on advertising and allows us to sharpen our focus on our core content business. Second, we received a landmark Supreme Court ruling that removed any distraction from our ability to achieve $2 billion in retransmission consent and station affiliate fees in 2020. With so many ways to sell our content before us, we are constantly refilling the pipeline with new hits. Following up on the CBS Television Network's first place finish in May, we continue to be the most-watched network this summer, with an unprecedented amount of original programming. This fall, we'll have ownership in four out of five of our new series and more than 70 percent of our total lineup, positioning us well for continued success in content licensing. Of course, the biggest upcoming event on network television is Thursday Night Football, which will further strengthen our schedule and provide an unparalleled platform from which we can launch our new shows. Our strategy of producing more original programming is paying off at Showtime as well, where we have premiered nine successful new shows in a row with more to come this fall. The strong confidence we have in our business is why today we have announced we are significantly expanding the value we return to shareholders. We are reloading the amount authorized under our share buyback program to $6 billion and raising our quarterly dividend by 25 percent. These actions once again demonstrate our enduring strength as a content company and our continued commitment to our investors."