By Tess Stynes And Keach Hagey
CBS Corp. said its first-quarter earnings fell 19% on lower
revenue that was hurt by the airing of fewer National Football
League playoff games and a decline in advertising revenue at its
local broadcasting business.
The shares still rose 1% to $61.85 in after-hours trading as
results beat analysts' expectations.
Like other media companies, CBS has been aiming to reduce its
reliance on advertising revenue to reflect shifts in how people
consume television shows and movies.
On an earnings call with analysts, CBS Chief Executive Leslie
Moonves said the company will be rolling out an Internet-delivered
version of its premium channel Showtime "in the coming months." The
online version of Showtime is aimed at reaching the 10 million
broadband-only homes that can't currently get Showtime, as well as
improve penetration in the 100 million households with TV
subscriptions by tweaking "the historical way cable has been
packaged."
Mr. Moonves noted that Time Warner Inc.'s similar HBO Now
product, which launched last month, is proving the opportunity for
premium channels to go over-the-top.
Mr. Moonves also said the company was "very encouraged by the
early success" of CBS All Access, the CBS network's $6-a-month
over-the-top subscription service, adding that he expected it to be
rolled out to the whole country by year-end. The company declined
to detail how many subscribers CBS All Access has, but Chief
Operating Officer Joe Ianniello said the $6 price point
"underscores our value in retrans and reverse comp
negotiations"--meaning that it is being used as a tool to boost the
fees that local CBS stations pay the network.
Separately, Executive Chairman Sumner Redstone earlier on
Thursday denied media reports that any decisions had been made
about who would succeed him as chairman of CBS and Viacom Inc. Mr.
Redstone said any such decision would be made by the companies'
boards, and not by any individuals.
He added that after his death, his stakes in the companies will
be overseen by a group of seven trustees. "Until that time, I will
continue to make all such decisions," he stated.
The New York Post on Wednesday reported that Mr. Redstone's
daughter, Shari Redstone, is in-line to succeed her father at CBS
and Viacom, and that her views likely will be supported by a
majority of the trust's directors, citing people close to the
situation.
Mr. Redstone, 91 years old, has made plans for how his roughly
80% voting stakes in both companies will be managed after his
death. Those interests will pass to Mr. Redstone's grandchildren
and their descendants, and will be managed by the seven-member
trust.
The trust will be comprised of three family members and four
nonfamily members and will include Mr. Redstone's daughter; her son
Tyler Korff; Viacom CEO Philippe Dauman; David Andelman, a CBS
board member; and George Abrams, a longtime Redstone family
attorney. It is widely expected that Messrs. Moonves and Dauman
would become chairmen of their respective companies after Mr.
Redstone dies, because their contracts stipulated that they won't
report to anyone other than Mr. Redstone.
Mr. Redstone wasn't on CBS's earnings call Thursday.
In the latest quarter, CBS reported that its advertising revenue
fell 4.8% to $1.78 billion. Content licensing and distribution
revenue decreased 4.2% to $1.03 billion, while affiliate and
subscription fees increased 11% to $628 million, driven by growth
in rates.
In the latest quarter, CBS's entertainment division--which
includes the television network, CBS Television studios and CBS
films--reported revenue fell 1.8% to $2.26 billion, from a year
earlier when CBS aired an additional NFL playoff game. Segment
operating earnings fell 18%, reflecting a higher investment in
sports and entertainment programming.
Revenue at the cable networks unit--which includes Showtime, CBS
Sports Network and Smithsonian Networks-- edged up 0.4% to $539
million and operating earnings fell 1.2%.
The company touted the strength of its prime-time TV lineup as
the end of the 2014-2015 television season draws closer.
"Looking ahead, we will continue to build upon our position of
great strength with a new prime-time lineup that we will announce
next week, and we expect to be No. 1 in the upfront marketplace,"
Mr. Moonves said in a news release Thursday
Overall, CBS reported a profit of $394 million, down from $468
million a year earlier. Per-share earnings were flat at 78 cents on
a decrease in shares outstanding. Revenue fell 2% to $3.5
billion.
Analysts polled by Thomson Reuters expected per-share earnings
of 75 cents and revenue of $3.45 billion.
Write to Tess Stynes at tess.stynes@wsj.com and Keach Hagey at
keach.hagey@wsj.com
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