CBS Corporation has reported strong third-quarter earnings, surpassing Wall Street expectations, due in part to growing revenues from affiliate and subscription fees.
In its first financial report since the September ouster of long-time chairman and CEO Les Moonves, total revenues for the mass media corporation grew 3% to US$3.26 billion from $3.17 billion for the same year-ago period.
That growth was led in part by digital initiatives, which surged in the quarter by 79%, credited to streaming subscription services and strong gains in retransmission revenues and fees from CBS affiliates.
Adjusted earnings per share, meanwhile, surpassed consensus estimates of $1.22, coming in at $1.24. That marked a 12% bump from the $1.11 a share in the prior-year period.
CBS said net earnings from continuing operations in Q3 improved by 17% to $488 million, or $1.29 per share, from $418 million ($1.03 per share) for the same quarter last year.
Third quarter operating income, meanwhile, dropped 5% to $690 million from $729 million as a result of “costs relating to corporate matters”, the company said. The company has seen several top executives depart in the wake of Moonves’ exit, which occurred after numerous allegations of sexual misconduct against him came to light in the publication of two New Yorker articles. CBS has also been entangled in a legal battle with National Amusements Inc., its controlling shareholder, with outlooks on a potential merger with Viacom contributing to the discord.
Adjusted operating income inched upward by 1% to $736 million from $729 million for the same prior-year period, which CBS said reflected the growth of revenue, which was “offset by increased investment in content, including a higher number of series produced, and the expansion of the company’s digital initiatives.”
CBS’ largest unit, which includes the CBS Television Network and CBS Television Distribution, generated swelling revenues of 19%, which expanded to $2.15 billion compared to 1.82 billion for the third quarter of 2017.
Meanwhile, at the company’s cable networks (Showtime and Smithsonian Networks), revenues in the quarter sunk 32% to $569 million compared to the same quarter last year ($840 million), with the shortfall attributed to Showtime Networks’ distribution of the Floyd Mayweather/Conor McGregor pay-per-view boxing event.
Revenues at the cable networks, however, also included growth from the Showtime subscription streaming service, which was offset by the timing of international licensing sales.
The cable networks division also saw a 16% decrease in operating revenues, dipping to $248 million from $296 million in 2017, which CBS attributed to increased investment in programming and higher advertising costs.
“CBS continues to deliver for our shareholders and execute our long-term growth strategy,” said CBS Corporation’s president and acting CEO Joe Ianniello (pictured) in a statement. “We turned in our best third quarter ever in revenue and EPS, and we remain on track to achieve our 2018 outlook, with revenue growth in the high-single digits and EPS growth in the high teens. At CBS and Showtime, our must-have programming is driving subscriber increases across all platforms, especially on our own direct-to-consumer streaming services, leading to a new record in total subscribers.
“Overall, we are confident that our strategy of growing CBS’ leadership position as a global multi-platform premium content company will lead to even greater creative and financial heights in the years to come.”