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CBS Breaks Revenue, Earnings Records in Q4 – and for All of 2017

Potential Viacom partner (yes, again) overcomes increased programming spend at CBS All Access, Showtime

CBS recorded record revenues and adjusted earnings per share (EPS) over the final quarter of 2017 — and for the whole year, too. Thank goodness for that adjustment, though. You’ll see what we mean in a bit.

Wall Street had forecasted Q4 earnings of $1.14 per share on $3.7 billion in revenue, per a Yahoo Finance compilation of media analysts. On Thursday, CBS reported EPS of $1.20 on $3.9 billion in revenue. Both of those were new all-time highs.

Along with the solid dollars and cents, company Chairman and CEO Les Moonves touted a combined near-5 million subscribers at CBS All Access and Showtime’s over-the-top offering combined. Executives did not break down the numbers more granularly than that.

CBS Corporation’s overall fourth quarter revenue grew 11 percent year over year. Pitching in the most on a percentage basis were the company’s content licensing and distribution revenues, which combined for a 33 percent increase. Additionally, affiliate and subscription fee revenues were up 20 percent — that one is thanks to a 31 percent increase in retransmission revenues and fees from affiliates and from CBS All Access and Showtime’s individual streaming services.

Combining CBS Television Network, CBS Television Studios, CBS Studios International, CBS Television Distribution, Network Ten, CBS Interactive, and CBS Films, the company’s entertainment revenue increased 18 percent in Q4. Advertising revenues were up 4 percent, driven by the addition of Australia’s Network Ten, which CBS acquired in November.

All told, operating income at the entertainment segment increased 25 percent in the fourth quarter, despite increased spending at CBS All Access.

On the cable end — Showtime Networks, CBS Sports Network, and Smithsonian Networks — while revenues were up 9 percent, operating income slipped 8 percent. That dichotomy was due to higher programming spend at Showtime.

The CBS-owned Simon & Schuster grew publishing revenue 12 percent over the recent 90-day period. Local CBS stations saw revenue slip 14 percent on the loss of political advertising.

Without its big adjustment covering tax reform, a pension settlement and restructuring charges, CBS posted a net loss of $41 million. That is better than last year’s $113 million net loss over the comparable three-month period. The corporation completed its split-off of CBS Radio this past November.

“I’m very pleased to report that CBS turned in outstanding fourth-quarter results, including double-digit revenue growth and our 32nd consecutive quarter of EPS growth, capping off a very strong year in 2017,” said Moonves. “The CBS Corporation produces many of the most-valuable programming franchises in the world, reaching more viewers than anyone else. This gives us a tremendous advantage as streaming becomes more central to our distribution strategy. As a result, we now have nearly five million subscribers at CBS All Access and Showtime OTT combined. When you add this to our retrans and skinny bundle subscribers, our total subscriber base continues to grow at an accelerated pace.”

“With the backdrop of this changing business model, and the completed separation of our radio business during the fourth quarter, we now have even greater visibility into our operations,” he continued. “Specifically, we expect 2018 to be another strong year for the CBS Corporation, with revenue growth in the high-single digits and EPS growth in the high teens from the record $4.40 we’re reporting to you today. So we feel very good about the growth path before us, and we continue to have great confidence in our ability to deliver for our shareholders.”

Shares of CBS stock closed Thursday at $56.74, up 88 cents apiece. The stock price inched up further after-hours.