CBS Beats Wall Street in First Earnings Post-Moonves

Cable revenue drops sharply vs. Mayweather-McGregor’s Summer of 2017

cbs earnings
CBS' logo on the iconography of a dollar bill

CBS announced its first quarterly-earnings since the forced resignation of former CEO Leslie Moonves on Thursday.

After markets closed, CBS reported revenue of $3.26 billion and earnings of $1.24 a share for the three months ended Sept. 30. That compares with the $3.17 billion in revenue and earnings of $1.11 a share CBS reported for the third quarter last year. Analysts had estimated CBS would report $3.24 billion in revenue and earnings of $1.22 a share, on average.

“CBS continues to deliver for our shareholders and execute our long-term growth strategy,” said Joe Ianniello, president and acting CEO, CBS Corporation. “We turned in our best third quarter ever in revenue and EPS, and we remain on track to achieve our 2018 outlook, with revenue growth in the high-single digits and EPS growth in the high teens. At CBS and Showtime, our must-have programming is driving subscriber increases across all platforms, especially on our own direct-to-consumer streaming services, leading to a new record in total subscribers.”

Affiliate and subscription fees grew 32 percent, driven by higher station affiliation fees and revenues from digital initiatives, including CBS All Access and virtual MVPDs. Entertainment revenues of $2.15 billion for the third quarter of 2018 increased 19 percent from $1.82 billion for the third quarter of 2017.
Cable Networks revenues of $569 million for the third quarter had a sharp drop of 32 percent from the $840 million for the same prior-year period, as a result of Showtime Networks’ distribution of the Floyd Mayweather/Conor McGregor pay-per-view boxing event in the third quarter of 2017. Revenues also included growth from the Showtime subscription streaming service, which was offset by the timing of international licensing sales.

Ianniello continued: “We are also significantly expanding our suite of over-the-top services through the recent launch of ETLive and the pending launches of 10 All Access in Australia and CBSN New York, with more international and local outlets on the way. Meanwhile, we’ve just taken another key step in refilling our content pipeline with a new, strong primetime schedule on the CBS Television Network, where we have ownership in five of our six new shows.”

He added: “And at Showtime, we continue to enhance our year-round content slate by adding key programming in entertainment, documentaries, and sports, where we have become the clear industry leader in boxing. Up ahead, 2019 looks to be another outstanding year, with the Super Bowl and Final Four back on CBS, strong gains in retrans and reverse comp, and continued growth in our direct-to-consumer streaming services, which are on track to reach a combined eight million subs, a year ahead of our original projections. Overall, we are confident that our strategy of growing CBS’ leadership position as a global multi-platform premium content company will lead to even greater creative and financial heights in the years to come.”

CBS’ third quarter will be known more for Moonves’ ouster, which happened in early September following multiple accusations of sexual misconduct against him. At the same time, the CBS board also reached a settlement to end its nasty legal fight with its controlling stakeholder, National Amusements Inc. In May, CBS filed a suit against Shari Redstone and National Amusements, a family-run business that controls roughly 80 percent of the voting power in both CBS and Viacom.

Joe Ianniello is currently leading the company as president and acting CEO, while the board searches for a permanent successor. The board itself has seen a shakeup, and has Strauss Zelnick, one of the new board members, leading on an interim basis. Showtime’s David Nevins was also brought on as chief creative officer last month.

While CBS may have had a tumultuous few months, it was business as usual on the earnings call with analysts. The company debuted its new leadership structure, with Ianniello joined by Nevins and new CFO Christina Spade. But aside from Ianniello saying he doesn’t expect any more significant changes and Nevins teasing further “Star Trek” announcements, there weren’t any specifics shared from the new team.

There were no updates about the fate of any potential severance package for Moonves or the investigation. Moonves was briefly mentioned during the call when Ianniello was asked if his view about content ownership vs outside studios on the broadcast network differed from the former CEO, who believed it didn’t matter where the shows came from as long as they were hits.

“We’re always looking for the best content,” Ianniello said. “I don’t see it changing really dramatically there.”