Nov. 5, 2014, 4:43 p.m. EST

CBS earnings jump on gain from Outdoor spinoff

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By Tess Stynes

CBS Corp. said its third-quarter earnings surged on a gain from its spinoff of CBS Outdoor Americas Inc. earlier this year, as well as revenue growth led by content licensing and distribution.

CBS has benefited from strong ratings relative to peers and the advent of retransmission fees charged to pay-TV companies. The company has fewer cable-channel properties than its competitors but has been working to reduce its reliance on advertising in recent years. Toward that end, CBS has sought to increase revenue from other sources such as international programming sales, domestic reruns and digital distribution deals.

This summer, CBS has turned its attention to its TV-station affiliates' share of pay-TV fees, aiming to capture a bigger chunk of retransmission-consent-fees for the network.

CBS Chief Executive Leslie Moonves said in a news release Wednesday that during the latest quarter "we renegotiated new station affiliate contracts with LIN Media, Tribune Broadcasting, Media General and Gray Television with more to come later this year, bringing us that much closer toward our stated goal of $2 billion in retransmission consent and reverse compensation revenues by 2020."

The entertainment segment--which includes the television network, CBS Television studios and CBS Films--reported revenue grew 1.4% to $1.91 billion, driven by higher television licensing as well as affiliate and subscription fees, partially offset by a soft advertising market.

The cable networks unit reported revenue rose 5% to $624 million, mostly on revenues from the licensing of Showtime original series, as well as increases in affiliate revenues from higher rates at Showtime Networks, CBS Sports Network and Smithsonian Networks.

In the latest quarter, advertising revenue grew 1.6% to $1.55 billion, driven by the broadcast of Thursday Night Football on CBS and political revenues related to the midterm elections.

Content licensing and distribution revenue grew 4.3% to $1.4 billion, thanks to increased international and domestic licensing of television programming.

Subscription and affiliate fees edged down 0.5% to $608 million as the year-earlier period benefited from a Floyd Mayweather pay-per-view boxing event.

Overall, CBS reported a profit of $1.64 billion, or $3.03 a share, which included a $1.56 billion gain related to its spinoff of CBS Outdoor. A year ago, the company had earnings of $494 million, or 80 cents a share. Excluding restructuring-related charges, write-downs related to a radio station swap and other items, earnings from continuing operations, were 74 cents a share.

Revenue increased 2% to $3.37 billion.

Analysts polled by Thomson Reuters expected per-share profit of 73 cents and revenue of $3.32 billion.

On Tuesday, CBS Outdoor said third-quarter revenue edged down slightly as softer national trends were offset by solid local growth and notable improvement internationally. The outdoor advertising company, spun off by CBS earlier this year, began operating as a real-estate investment trust in July, lowering its expected effective tax rate. The company plans to change its name to Outfront Media and its ticker symbol to OUT later this month.

Write to Tess Stynes at

Access Investor Kit for CBS Corp.


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