CBS’ third-quarter profit boosted by billboard spinoff
CBS Corp. didn’t need a billboard to tell Wall Street that it was weathering a downturn in the advertising market.
The New York broadcasting giant increased third-quarter revenue by 2% to $3.4 billion, which was slightly ahead of analysts’ expectations.
“We are still the best game in town,” CBS Chief Executive Leslie Moonves told analysts on a Wednesday conference call.
Earnings for the July-September period were largely shaped by the company’s spinoff of its billboard business, formerly known as CBS Outdoor.
That divestiture in July boosted quarterly profit to $1.64 billion, or $3.03 a share, up from $494 million, or 80 cents a share, in the year-earlier period. The spinoff resulted in a $1.56-billion gain for the media company.
Excluding restructuring charges, the divestiture and a $52-million write-down for a TV station swap with another company, earnings came in at 74 cents a share. Analysts had predicted 73 cents a share from continuing operations.
Net earnings from continuing operations dropped nearly 28% to $952 million for the quarter.
Higher programming costs, including CBS’ pricey contract for NFL football on Thursday night, and unfavorable foreign exchange rates put a drag on profit. CBS paid more than $275 million for the rights to eight prime-time football games, and much of that was recorded during the third quarter.
However, CBS was able to use “Thursday Night Football” to demand husky advertising rates on the broadcast network.
“The NFL football has clearly been a great addition to our prime-time lineup,” Moonves said.
CBS, however, was disappointed that many of the contests were blow-outs, with less-than-stellar ratings. On the bright side, the NFL gambit allowed CBS to move other shows around the prime-time schedule and launch new programs.
Advertising revenue was up 2% companywide. Political spending in advance of this week’s elections also helped generate revenue to CBS’ TV and radio station group, with more campaign dollars expected during the current quarter.
CBS Entertainment, which includes the flagship CBS broadcast network, produced 1% higher revenue at $1.9 billion. Operating income declined 22% to $335 million, again weighed down by the NFL football deal.
Cable networks, including Showtime, increased revenue 5% to $624 million, largely attributed to higher licensing fees for syndication sales of Showtime original shows. Cable operating income was up 4% to $272 million.
Simon & Schuster book publishing revenue declined 11% to $199 million. Operating income of $43 million was about flat compared with the year-ago period.
Local broadcasting revenue rose 6% to $680 million, with politicians buying plenty of airtime on CBS TV and radio stations. TV station revenue was up 10% while radio airtime sales perked up 2%.
Operating income for the stations increased 18% to $214 million.
CBS earnings closed up 51 cents to $52.50 a share. The company, controlled by billionaire Sumner Redstone, released its earnings after the markets closed, and shares continued to gain ground in after-hours trading.
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