CBS Q2 profit fell 7 percent
CBS Q2 profit fell 7 percent due to lackluster advertising sales across the whole business, including its CBS broadcast networks. The broadcasting giant added that its program licensing fee income also declined. However, results were better than analysts had forecast.
Despite strong ratings at the CBS broadcast network compared to rivals, as well as increased retransmission fees charged to pay-TV firms, a “softness in the advertising marketplace” undermined revenue.
The New York based company, controlled by the media magnate Sumner Murray Redstone, posted Q2 net income of $439 million, or 76 cents a share, from $472 million (76 cents a share) in Q2 2013.
Revenue at $3.2 billion was 5.4% lower than for the same period last year. The company doubled its buyback to $6 billion from $3 billion.
Industry-wide advertising income decline
CBS, which broadcasts The Big Bang Theory, Big Brother and NCIS, said advertising sales during the second quarter were down across the whole industry.
In 2013, CBS broadcast the semi-finals of the NCAA men’s basketball tournament, which in 2014 went to Time Warner’s Turner networks. Not broadcasting the event this year contributed to the decline in the second quarter.
President and CEO of CBS Corp., Leslie Moonves, said that despite some challenges during Q2, the company was now experiencing considerable improvements both at local and national levels.
(Data source: CBS Corporation)
Mr. Moonves said the company’s high-margin, fast-growing revenue streams continue driving earnings per share, which are set to become an even bigger factor in CBS’ growth going forward thanks to two recent major events:
- The separation of CBS Outdoor has been completed, making the company less dependent on advertising and allowing it to sharpen its focus on its core content business.
- The broadcaster received a Supreme Court ruling that removed any distraction from the company’s ability to achieve $2 billion in retransmission consent and station affiliate fees in 2020.
The most-watched network
Mr. Moonves said:
“With so many ways to sell our content before us, we are constantly refilling the pipeline with new hits. Following up on the CBS Television Network’s first place finish in May, we continue to be the most-watched network this summer, with an unprecedented amount of original programming.”
“This fall, we’ll have ownership in four out of five of our new series and more than 70% of our total lineup, positioning us well for continued success in content licensing.”
(Data source: CBS Corporation)
CBS says Thursday Night Football will further strengthen its schedule and provide a strong platform from which it can launch its new shows.
CBS Corp. had considered placing an offer for CNN after Rupert Murdoch said he was interested in selling the 24-hour news channel if he purchased its current owner Time Warner Inc. Now that the deal is not going to proceed, Mr. Moonves says he is not interested any more.
TheStreet Ratings team today rated CBS as a “Buy” and gave it a ratings score of B+.