CBS head touts Eye's 11% revenue growth
No one has been a more vocal advocate for broadcast networks becoming dual revenue businesses, like their cable channel counter-parts, than CBS CEO Leslie Moonves.So on Tuesday, when CBS reported second-quarter earnings results, buoyed by stronger advertising, Moonves was quick to point out that his company was not just benefitting from “the rising tide” of the economy. He said new carriage fees, subscription dollars and efforts to reduce debt helped CBS boost revenue in the quarter by 11% to $3.3 billion, and operating profits by 80% to $435 million. Over the years among the media congloms, CBS has been labeled an advertising company, overly-dependent on Madison Avenue and subject to cyclical trends in the economy that impact ad spending. While CBS still derives two-thirds of its revenues from ad dollars, Moonves had reason to feel good on Tuesday about other revenue streams. A day before, he announced a far-reaching, 10-year distribution deal with cable operator Comcast, which will pay fees to carry CBS stations and the company’s family of cable channels, including pay cabler Showtime, on all platforms. CBS now has retransmission agreements with 60 cable, satellite and telco companies, Moonves said. “We are doing more than participating in the economic recovery,” he asserted. In a conference call with analysts, Moonves declined to disclose how much Comcast would pay CBS over the life of the deal. On the ad front, revenues in the quarter rose 9% to $2.2 billion, and by 30% at CBS local TV stations and by 8% at its radio outlets. Moonves said more than 80% of its ad inventory was sold following CBS’ upfront presentations, at higher rates. While some recent reports have suggested the economic recovery is slowing, Moonves said he is seeing comparable ad spending so far in the third quarter and expected it to continue for the entire year, with an additional lift from political advertising in the fourth quarter. “We don’t foresee a slowdown,” Moonves said. Subscription revenues were helped by a 9% jump in subscribers to Showtime, The Movie Channel and Flix to 63.5 million, as of the quarter’s end on June 30. Syndication fees got a boost from the international sales of shows such as the “CSI” franchise, “NCIS: Los Angeles” and “The Good Wife.” So far this year, CBS has reduced its debt by $840 million, said CBS CFO Joseph Ianniello, allowing it to trim interest payments by $40 million a year. Moonves said CBS Films, which has gotten off to a slow start since it was launched in 2007, will announce its 2011 slate shortly. He said “Faster,” which will be its final release this year and stars Billy Bob Thornton and Dwayne Johnson, is getting a lot of good buzz.