Ad Softness Crimps CBS Q2 Results

CBS said second-quarter net income fell 3.9%, as advertising softness resulted in revenue shortfalls at three of its major segments during the period.

The company said revenue fell about 5.3% — to $3.17 billion from $3.39 billion — as its entertainment and local-broadcasting operations were affected by a soft advertising market and its cable segment had to deal with declines in international licensing revenue. A bright spot was the company’s publishing segment, led by Simon & Schuster, where increased sales of print books led to a revenue gain for the period.

CBS said net income from continuing operations fell to $418 million in the second quarter, compared with $435 million a year earlier. Due to a fall in the number of the company’s outstanding shares, however, net earnings per share rose from 70 cents to 72 cents.

Results at the company’s flagship broadcast outlet were affected by CBS’ deal with Time Warner to share broadcast of the NCAA men’s basketball championship tournament. Where CBS broadcast the semifinals of the contest in 2013, Time Warner’s Turner suite of cable networks did so this year, resulting in a decrease in ad revenue. Total revenue at CBS’ entertainment segment, which comprises the CBS network, CBS Interactive and its films and studio operations, fell from $2.01 billion to $1.84 billion.

During a conference call with investors, CBS CEO Leslie Moonves said the company was taking steps to produce more content that it could leverage for licensing revenue both in the U.S. and abroad. At the CBS network, Moonves said he expected the company to own approximately 70% of the programs slated to air in the coming TV season. Meanwhile, he said the company would increase its production of content for other outlets. He cited programming that CBS had already produced for the CW and ABC, and articulated a desire to produce series for streaming-video outlets as well.

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