Multinational media company CBS Corporation has posted a 35% dip in profits in its third-quarter earnings report due in part to higher costs associated with the entertainment and media conglomerate’s proposed merger with Viacom Inc.
National Amusements, the mass media holding company controlled by the Redstone family which holds the majority of voting shares for Viacom and CBS, is expected to close the pending US$30 billion consolidation deal by early December.
On Tuesday (Nov. 12), the commercial broadcast network reported a net income of US$319 million, or 85 cents a share, compared with $488 million, or $1.29 a share, for the third quarter of 2018. Adjusted net earnings plunged 24% to $356 million largely driven by the lower operating income, CBS said in a statement. Those losses were offset partially by a “lower effective income tax rate in 2019.”
Revenues for the third quarter, meanwhile, grew just 1% to $3.30 billion compared to the same prior-year period ($3.26 billion).
“We delivered record third-quarter revenues as we continue to increase our investment in our premium content and direct-to-consumer streaming services, which is the cornerstone of our growth strategy,” said Joe Ianniello (pictured), president and acting CEO of CBS, in a statement. “We are building great momentum as we near our merger with Viacom and head into 2020.”
CBS’s adjusted operating income saw a 21% drop in Q3 to $581 million compared to year-ago profits of $736 million. The dip, CBS reported, was due to increased spend on content produced for multiple platforms and the company’s imminent Viacom merger.
Meanwhile, retransmission consent, reverse compensation and virtual MVPD revenues grew 18%, affiliate and subscription fee revenues climbed by 12%. The gains represented “more than a third” of CBS’s overall revenues in the quarter.