CBS Misses Revenue Estimates Despite Jolt From Super Bowl -- 2nd Update
May 02 2019 - 7:23PM
Dow Jones News
By Micah Maidenberg and Benjamin Mullin
CBS Corp. said the Super Bowl bolstered its advertising results,
helping push up its first-quarter profit, but the media company
missed revenue expectations amid a weaker performance in its cable
networks business.
The advertising gains highlight the importance of live sports
for CBS's broadcast operations. Executives have already started
discussing a new deal with the National Football Association, even
though its deal with the league runs through 2022.
The New York-based company on Thursday also said revenue from
its direct-to-consumer streaming services reached a record level,
with subscribers to its CBS All Access product and its Showtime OTT
streaming service growing 71% from a year earlier.
During a conference call, CBS acting Chief Executive Joe
Ianniello said the company plans to spend $8 billion on programming
in 2019, putting the company on par with other major networks and
direct-to-consumer streaming services.
"The driving force behind our direct-to-consumer services -- and
our entire company -- is our premium, must-have content," Mr.
Ianniello said.
Later during the call, CBS Interactive President Jim Lanzone
touted the growth of CBS All Access, adding that two-thirds of
subscribers are opting to view a limited amount of commercials.
He also said the vast majority of subscribers to CBS All Access
aren't so-called cord-cutters, viewers that have abandoned
traditional pay-TV.
"We definitely don't view it as a zero-sum game," he said.
Mr. Ianniello said he expects CBS to continue to benefit from
the legalization of sports betting, which has begun on a
state-by-state basis since a Supreme Court decision last year that
struck down a federal law banning the practice.
The company said advertising revenue rose 18%, driven by the
broadcast of the Super Bowl in February on the CBS Television
Network.
However, revenue in the company's cable networks business
declined 3%, due in part to lower programming sales.
CBS's first-quarter revenue increased 11% from a year earlier to
$4.17 billion. Analysts expected $4.3 billion, according to
FactSet.
Shares fell 0.9% in after-hours trading.
New York-based CBS reported a profit of $1.58 billion, or $4.21
a share, compared with $511 million, or $1.34 a share, a year
earlier. The company recorded a tax benefit in the first quarter
and a $549 million gain from the sale of CBS Television City in the
quarter, both of which pushed earnings higher.
CBS's profit was also propelled by growth from its local media
unit, where operating profit increased 17% compared with the same
period last year.
After adjustments, CBS earned $1.37 a share, a penny more than
what analysts were looking for.
CBS has faced a range of personnel challenges in recent months,
including a legal battle with its former top executive, Leslie
Moonves, who resigned after facing numerous sexual misconduct
accusations.
He has denied those charges.
Last month, the company suspended its search for a new leader
and said acting Chief Executive Joseph Ianniello would continue in
that role through the end of the year.
Write to Micah Maidenberg at micah.maidenberg@wsj.com and
Benjamin Mullin at Benjamin.Mullin@wsj.com
(END) Dow Jones Newswires
May 02, 2019 19:08 ET (23:08 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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