CBS Corp. said first-quarter profit rose as revenue from advertising, content licensing and affiliate fees – its three main financial engines increased during the period.
The New York owner of CBS Corp. and Showtime said revenue rose 13% to $3.76 billion, compared with $3.43 billion in the year-earlier period. In prepared remarks, CBS CEO Leslie Moonves attributed the company’s results to demand for its content across various media venues, ranging from broadcast TV to new services delivering CBS and Showtime content via broadband. CBS said it earned $511 million in the first quarter, or $1.32 a share, in the quarter, compared with a loss of $252 million, or 61 cents a share, in the year-earlier period.
CBS said revenue from affiliates and subscriptions rose 16%, led by higher retransmission fees gathered from local stations and distributors as well as from the company”s streaming-video services. Content licensing and distribution revenues rose 18%, owing to international licensing of new series as well as library programming. Advertising revenues rose 8%, including results from Network Ten. an Australian holding CBS acquired. Ad revenue at the CBS broadcast network rose 1%.
The company said revenue rose 16% at its entertainment operations, which include its CBS broadcast network, to $2.72 billion, compared with $2.35 billion in the year-earlier period. Revenue at its cable networks rose 12% to $609 million, compared with $543 million, owing to growth at Showtime’s subscription-based streaming service and renewal of licensing for Showtime original series.
CBS is under some pressure to demonstrate robust activity at its operations. Shari Redstone, who controls the company via her family’s National Amusements Inc., has asked CBS and her family’s other holding, Viacom, to pursue a merger. Discussions have wavered over price and executive positions in the new company. By showing how CBS is generating new revenue from distributors as well as subscription video, Moonves and his team are making a case for his leadership at present and down the road.
During a call with investors, Moonves portrayed CBS as a company that was eager to draw new fees and revenue from newer forms of distribution, and one that was launching new products such as a streaming-video sports news outlet.
“We have a well-documented, long-term strategy that produced record results here in the quarter, will lead to record results for the year, and will produce extremely compelling results right through our 2020 targets and beyond,” Moonves said.
Moonves acknowledged that the arms-race mentality in the series production arena is raising the stakes for networks and studios. But he emphasized that CBS remains a strong platform for launching shows into profitability through syndication.
“We will be more disciplined” in spending, he said. At CBS, creative partners “get visibility with the shows and something called a backend.”
Noting the megabucks deals that Netflix has recently signed with showrunners Shonda Rhimes and Ryan Murphy, Moonves pointed to one of CBS’ most prolific producers. “There’s a guy named Chuck Lorre who has made a lot more than a couple hundred million on the back-end of his shows on the CBS Television Network.”