CBS missed Wall Street’s projections as revenues derived from content licensing and distribution fell 11%, even as its results were buoyed by advertising associated with the 2018 midterm elections.
The New York owner of the CBS television network and Showtime said net income from continuing operations came to $561 million, or $1.49 per share in the fourth quarter, compared with $40 million, or 10 cents per share, a year earlier. CBS said it recorded a $129 million charge related to the changes in the U.S. tax law last year.
The quarter also included $42 million in charges related to restructuring and professional fees as well as $85 million in charges having to do with changes in strategy related to the company’s CBS Films unit.
Revenue rose 3% to $4.02 billion, compared with $3.92 billion in the year-earlier period. Wall Street had expected revenue of $4.16 billion.
During a call with investors, CBS’ acting CEO Joseph Ianniello said the company would increase the number of original hours it produced for its own outlets, as well as for other platforms, such as Walt Disney’s new Disney + streaming service. He said the company had raised its estimates for OTT subscribers to its Showtime broadband service and its SVOD CBS All Access service to 25 million by 2022. The two outlets have already attracted 8 million subscribers between them, he said. “Direct to consumer services are our future,” he said to investors, while suggesting the company’s entry into the space ahead of its rivals would serve it well in the near future.
Revenue at its CBS Entertainment operations fell 1% to $2.83 billion, owing to a 14% dip in revenue from content licensing and distribution, largely due to the timing of international licensing sales and several large domestic sales in the fourth quarter of 2017. CBS said affiliate and subscription fees grew 17% during the period, owing to new revenue from CBS All Access, and affiliate fees. , s. Advertising revenue increased 2%, thanks in part to new revenue from the company’s acquisition last year of Australia’s Network 10.
The company said revenue at its cable operations rose 8% to $551 million, owing to growth from the Showtime subscription streaming service, higher international licensing sales, and revenues from the Deontay Wilder/Tyson Fury pay-per-view boxing event in December 2018. Operating income fell 7% owing to new investment in programming.