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CBS Q3 Revenue Rises 3% on Affiliate Fees, Showtime Boxing

CBS Corp. said third quarter profit rose despite dips in revenue at its flagship TV operations as higher retransmission and affiliate fees and a surge of interest in a Floyd Mayweather boxing match distributed via Showtime helped buoy results.

The company’s net income rose 23% to $592 million, or $1.46 a share, from $478 million, or $1.07 a share, in the year-earlier period. Those results included a non-cash gain of $100 million having to do with the sale of CBS Radio.   Earnings from continuing operations fell to $418 million, or $1.03 per share, in the quarter compared with $466 million, or $1.04 per share, a year earlier.

Revenue for the third quarter rose 3% to $3.17 billion from $3.08 billion in the year-earlier period.

In a sign of how consumption of video entertainment is changing, CBS said affiliate and subscription fee revenue rose 52%, citing distribution in the period of a high-profile pay-per-view fight between Floyd Mayweather and Conor McGregor. What’s more, retransmission revenue and fees from CBS network affiliates rose 27%. But revenue related to content licensing fell 22%, and advertising revenue dipped 5%, largely due to lower sales of political advertising after an election year.

“As consumers cut the cord and switch to skinny bundles or go over-the-top, the economics get better for us,” said CBS Corp. CEO Leslie Moonves during a conference call Thursday with investors.

Revenue in the company’s largest unit fell 7% to $1.82 billioin, compared with $1.95 billion in the year-earlier period. Affiliate and subscription fees grew 35%, driven by higher station affiliation fees and growth from new digital initiatives, including CBS All Access and third-party live television streaming offerings.  Advertising revenues decreased 3% for the quarter, partly resulting from one fewer Thursday Night Football game broadcast on CBS.

Moonves placed emphasis during the call on the continued roll-out of programming at “CBS All Access” and expressed confidence CBS programming would be a must-carry for so-called “skinny bundles” sold to people less intersted in carrying a traditional subscription to cable or satellite services.

The executive confirmed that the company is in “very preliminary stages” of considering whether it should sell its CBS Television City production facility, Moonves said. “It’s on very valuable real estate,” he noted. “We have an offer from one of the people in the neighborhood. We have hired somebody” to evaluate what ought to be done. “It’s maybe money that could be used better elsewhere.”

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