CBS delivered what the Eye described as the company’s best-ever third-quarter results Wednesday, powered by higher content licensing and distribution revenues.
CBS boss Leslie Moonves addressed the elephant in the room head on during the conference call — namely whether the monthlong blackout this summer of CBS stations in Time Warner Cable markets took a toll on the Eye.
Moonves’ answer was a flat-out no, and he added that the Eye maintained the right to cut lucrative digital deals for its programming even after coming to terms with TW Cable. He ticked off recent deals with Netflix (for now-concluded Showtime drama “Dexter”), Amazon, Comcast’s Streampix and a broad expansion of the CBS app for IOS and Android platforms.
“The deals show the importance of retaining our digital rights,” Moonves said.
CBS’ flagship New York stations even saw advertising revenue climb 10% during the quarter, despite the August blackout on TW Cable, Moonves added.
CBS’ numbers came in right at Wall Street’s earnings expectations of 76 cents per share, up 19% from the year-ago quarter. Revenue for the quarter hit $3.6 billion, up 11% from the year-ago frame, while net earnings from continuing operations grew 12% to $469 million. Operating income before depreciation and amortization grew 4% to a hefty $941 million.
The wind in CBS’ sails came from higher retransmission and affiliate comp fees as well as syndication coin harvested from “NCIS: Los Angeles” and “The Good Wife.”
Moonves emphasized that CBS’ content pipeline will continue to stay strong with new CBS-owned shows such as “Blue Bloods,” “Hawaii 5-0” and “Elementary” coming into syndication, as well as Showtime’s “Ray Donovan.” He also gave a big plug to the prospective “NCIS” series set in New Orleans, a planted spinoff that will have a trial run as an “NCIS” seg in April. He also has high hopes that frosh Thursday comedy “The Millers” will become the first CBS-owned comedy hit to get to syndication since “Everybody Loves Raymond.”
“Between CBS and Showtime there’s a constant drive to own more and more of our content,” he said, in order to have maximum control of lucrative digital and international licensing opportunities.
He also enthused about the creation of “a new daypart” with CBS investment in original summer programming, which paid off this past frame with the success of “Under the Dome.” That show nearly paid for itself with the digital second-window licensing pact the Eye struck with Amazon. Moonves touted plans for next summer with “Dome” and a new drama, “Extant,” to star Halle Berry, which is also expected to have a digital component.
“We have in essence created a whole new day part in generating new advertising revenues, new digital streaming models and new content franchises that will pay off for years to come,” Moonves said.
Among other points the came up during the wide-ranging Q&A:
** Moonves again asserted that CBS expects the seven-day viewing frame “to be the norm” for advertising deals next season. The network is already cutting some deals based on a C7 metric and enthusiastic about improvements in the measurement of VOD viewing. “We intend to monetize that viewing going forward,” he said. “We think C7 is pretty obvious. The (viewing) numbers between C4 and C7 are pretty substantial and should not be left behind.”
** Advertising sales for the CBS network climbed 13% for the quarter — the biggest gain in many years.
** Based on the pact with TW Cable and other MVPDs, CBS is now projecting to generate more than $1 billion in retransmission consent and affiliate compensation by 2017. CBS has been promising Wall Street the $1 billion number for a long time. “We’re tracking well ahead of $1 billion,” Moonves said.
** CBS’ revenue mix has leveled out considerably and is now nearly 50-50 between advertising and non-advertising based coin.
** Local advertising prospects at CBS’ TV stations are generally looking good, despite tough year-over-year comps against the 2012 presidential election cycle. Mid-term election battles shaping up in several states bode well for the group’s 2014 haul. “As we’ve said before, rancor equals revenue,” Moonves joked.
CBS’ Entertainment wing — encompassing the mothership broadcast net, film and TV studio, global distribution operations and CBS Interactive — saw revenue climb 12% to $1.9 billion and OIBDA rise 12% to $384 million.
The cable networks group (Showtime, CBS Sports Network and Smithsonian Channel) posted a 37% hike in revenue to $596 million, fueled by the turnout for Showtime’s pay-per-view boxing bout with Floyd Mayweather. Cable’s OIBDA jumped 15% to $261 million.
Revenue was up 7% at the Simon and Schuster publishing unit (to $224 million) while OIBDA climbed 10% to $43 million.
CBS’ TV and radio stations saw a revenue dip (down 3% to $641 million) compared to the political ad windfall seen in the year-ago quarter; OIBDA dropped 15% to $181 million.