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CBS profits strong on content, cable

Licensing, distribution revs lead conglom to solid quarter

CBS Corp. net profit climbed nearly 7% to $338 million last quarter driven by entertainment and cable networks as CEO Leslie Moonves declared that “we have transformed CBS into a content company designed to perform in any environment.”

The most watched television network, CBS has been on fire this season with new and returning series including the tricky re-launch of “Two and a Half Men.”

“Whoever says networks television is a cyclical business hasn’t been paying attention to CBS. It’s been the top network for nine of the past ten years,” said Moovnes, who’s earned bragging rights for his record. He’s also built Showtime into a major pay-TV player. Simon&Schuster is the lucky publisher of Walter Isaacson’s record shattering “Steve Jobs” biography.

CBS revenue inched up 2% to $3.4 billion. Local television station revenue fell 6% on lower political advertising, and entertainment revenue was flat with fewer episodes made available for domestic syndication this year versus last.

On the upside now and for years to come: a spurt of content licensing and distribution revenue led by new digital streaming agreements. Last month the company inked two landmark deals for The CW Network with Netflix and Hulu. Moonves acknowledged that flagship CBS network “continues to be a holdout” in inking such pacts, still seeing profits in the traditional syndication market.

“CW is a different animal. It appeals to a much younger demographic and a lot of viewers are watching online,” he said during a conference call. “We got a chunk of money…The CW went from being a money-loser for CBS to a profitable venture.”

The network is part of CBS”s growing entertainment division where profits surged 46% from the year before to $405 million. Despite its strong showing, the network had lower programming costs year-on-year.

The division, which includes CBS Studios, CBS International, CBS Television Distribution, CBS Films and CBS Interactive Entertainment, posted revenue of $1.6 billion.

Cable Networks led by Showtime (Showtime, The Movie Channel and Flix) and CBS Sports Network saw revenue rise by 14% to $420 million on higher licensing revenues from international syndication and digital streaming of Showtime original series.

Showtime, at 21 million subscribers, added about 2 million subs year on year.

Cable profits rose 19% to $203 million.

CBS TV and radio stations saw revenue dip 3% to $656 million. Profit fell 6% to $184 million.

Television station revenue fell 6% on lower political advertising. It would have up been up 2% excluding political.

CBS noted improvement across key advertising categories, including financial services and domestic auto.

Radio revenue was flat.

Moonves noted that as other businesses grow, local broadcast has been decreasing as a percentage of total revenue, now standing at 19%.

Simon&Schuster revenue was about flat at $220 million. Profit rose 19% to $38 million. Digital content repped 17% of the publisher’s total revenue – more than double a year ago.

Outdoor revenue rose 4% to $477 million. Profit grew 4% to $80 million.