CBS Corporation Posts Q3 Revenue Gains

NEW YORK: CBS Corporation reported revenues of $3.37 billion in the third quarter, up 2 percent from the same quarter a year ago, with growth driven by a 4 percent increase in content licensing and distribution revenues.

Advertising revenues grew 2 percent, driven by the broadcast of Thursday Night Football on CBS and political revenues associated with midterm elections. Affiliate and subscription fees were on par with the third quarter of 2013, because of a significant pay-per-view boxing event a year ago that affected the revenue comparison by 6 percentage points. Cable affiliate fees, retransmission revenues and fees from CBS Television Network affiliated stations all continued to grow in this year's third quarter.

Adjusted OIBDA of $814 million was down 2 percent, with an increased investment in TV programming, mainly associated with new contracts with the NFL. Adjusted net earnings from continuing operations were $400 million for the third quarter of 2014 compared with net earnings from continuing operations of $431 million for the same prior-year period. The decline primarily reflects the higher programming investment as well as losses of $23 million associated with changes in foreign exchange rates.

Operating income was $668 million for Q3 compared with $764 million for the same prior-year period, including restructuring charges of $26 million and a noncash impairment charge of $52 million in connection with a radio station swap.

The Entertainment unit—CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive and CBS Films—saw revenues up just slightly, increasing 1 percent to $1.91 million. This was driven by higher TV licensing and affiliate subscription fees, partially offset by a soft ad market. Entertainment OIBDA was $335 million, down from the $431 million a year ago. This was from higher investment in TV programming, largely from the NFL broadcasts. Operating income for Q3 also includes restructuring charges of $8 million.

Cable Networks—Showtime Networks, CBS Sports Network and Smithsonian Networks—has revenues of $624 million, an increase of 5 percent. This was driven by an increase in revenues from the licensing of Showtime original series, as well as gains in affiliate revenues from higher rates at the three cable networks and an increase in telco subscriptions. Cable Networks OIBDA was up 4 percent to $272 million, thanks to the revenue growth.

"Our third quarter growth reflects the success of our efforts to create and monetize our premium content," said Leslie Moonves, the president and CEO of CBS Corporation. "I am particularly pleased with the CBS Television Network's encouraging start to the fall season, which has reloaded our owned content pipeline in a big way with Madam Secretary, Scorpion and NCIS: New Orleans, along with new owned hits from Showtime and The CW. Our local businesses had a strong quarter as well, including increasing political spending and higher retransmission consent fees. Also during the quarter, we renegotiated new station affiliate contracts with LIN Media, Tribune Broadcasting, Media General, and Gray Television with more to come later this year, bringing us that much closer toward our stated goal of $2 billion in retransmission consent and reverse compensation revenues by 2020. We are also capitalizing on growing consumer demand by expanding into emerging platforms. This includes the recent launch of CBS All Access, which allows our 'super fans' to watch CBS wherever they are. At the same time, we are returning more value to shareholders than ever before, and we continue to have great confidence in our future as a content company in this ever-expanding marketplace."