Profits up at CBS but revenue falls

Ad coin shows marketplace steady says company

CEO Leslie Moonves said Super Bowl XLVII, which will air on CBS in February, has sold out more than 80% of ads, well ahead of three years ago when it last aired on the network, with the spots “selling at terrific prices.”

CBS Corp. profits rose 8% to $427 million in the three months ended in June, which he called a record since it became a stand-alone public company.

Moonves said during a conference call to discuss earnings that he hopes to update Wall Street soon on new digital deals, which could include international pacts, extensions of existing ones or agreements with new players in the space. CBS has deals with Netflix and Amazon, the CW with Hulu.

A renewal with Netflix is “preordained,” Moonves said, “and we have a better idea of which shows are working and which aren’t. Some are working better than others. It’s good to have the ‘Star Trek’ franchise, that works exceedingly well. We will be adding titles like ‘CSI: Miami,’ which just came off our schedule. The bottom line is that we will get more money for this.”

Moonves was also upbeat on a deal with Chellomedia announced this week that will expand CBS-branded channels in Europe, the Middle East and Africa. The model is a four-channel deal it already has with Chello in the U.K., where CBS content acts as equity. Now it’s “expanded into 83 new channels without a dime,” Moonves said.

CBS sales of content globally have passed the $1 billion mark. “The appetite for CBS shows overseas continues to be huge,” said Moonves. “We’re selling these shows for millions of dollars an episode before they even air in the U.S.”

CBS said revenue fell slightly to $3.48 billion from $3.59 billion on tough comps from the year-earlier quarter, which included its initial multi-year digital streaming deal with Netflix and the semifinals of the NCAA Division I Men’s Basketball Championship.

Ad revenue also dipped, to $2.14 billion from $2.21 billion. Content licensing and distribution sales eased to $816 million from $886 million. Affiliate and subscription fees rose to $465 million from $429 million.

The U.S. presidential race will give the broadcast biz a big boost, said Moonves. And the Olympics is powering up the company’s big outdoor advertising group, which has a major presence in London.

The entertainment division — CBS Television Network, CBS studios, distribution, CBS Films and CBS Interactive — saw revenue fall 7% to $41.7 billion. 

Cable networks, led by Showtime and CBS Sports, posted gains of 8% to $446 million.

TV and radio station revenue nosed up 2% to $704 million. TV stations rose 6%, reflecting increased spending by automotive manufacturers, higher political advertising and higher retransmission revenues, partially offset by lower ad spend by retail and financial services. 

CBS Radio revenues decreased 2%.

Asked about speculation the company may sell its outdoor business, Moonves said what he always does; that CBS is not actively seeking a buyer but “would take a serious look if somebody came along with the right price.”

He also said he loves radio, which throws off lots of cash and is a creative business with improving results. “I would not, absolutely, say that it is a non-core asset.”

However, he wouldn’t mind unloading TV stations that are outside of the top 15 major markets.