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CBS Misses on Revenue, Narrowly Beats Q4 Earnings Expectations

A poor NFL season and fewer Thursday night games took its toll on the network

America’s most watched network once again topped earnings per share expectations, although it missed on revenue as lower NFL ratings had a serious impact on ad dollars.

CBS reported revenue of $3.52 billion and earnings of $1.11 a share for the three months ended Dec. 31 after markets closed Wednesday. The network hauled in $3.59 billion in revenue and earnings of 92 cents a share for the same period a year earlier. CBS failed to beat analyst expectations on revenue, which were $3.96 billion on average, but topped earnings per share estimates, which averaged $1.10. The company has met or exceeded earnings expectations in every period since the first quarter of 2013.

“2016 was a phenomenal year for the CBS Corporation, with all-time highs in revenue, operating income, and EPS that came in above $4 for the first time in our company’s history; and as we begin 2017, I couldn’t be more excited about our growth prospects in the years ahead,” CBS Corporation Chairman and CEO Leslie Moonves said in a statement. “We are already exceeding our projections to generate billions of dollars in incremental revenue, thanks to our new, fast-growing revenue sources and the strength of our base business. At the CBS Television Network, we are on track to be number one for the ninth year in a row and 14 out of the past 15 years. And with ownership in more than 80 percent of our primetime lineup, the opportunities to monetize our hit shows across platforms and around the world have never been better.”

A good part of CBS’ revenue “miss” can be chalked up to its classification of its since-separated CBS Radio business as discontinued operations, while analysts still included it in the company’s consolidated financials. However, a poor NFL season took a toll.

While some other TV networks have struggled as cord-cutters have moved in small but material numbers to internet TV, CBS, with its NFL rights and older-skewing viewership has held relatively steady. This year’s NFL season suffered through a slow start due to election overhang and finished down 8 percent in average viewers after years of growth, and that weighed down the company’s earnings.

With those lower ratings and three fewer Thursday Night Football games in the period, CBS’ advertising revenue fell 3 percent in the quarter compared to the previous year.

However, CBS has also embraced streaming, and the company has benefited from growth in two separate services it owns, CBS All Access and Showtime’s over-the-top platform. Growth in digital distribution was one of the bright spots the company identified in its earnings release.

Showtime now has 1.5 million internet-only subscribers, Moonves revealed at a UCLA event this week, and CBS All Access is approaching the same. Just six months ago on CBS’ second-quarter earnings call, Moonves ballparked both subscription services at about 1 million subscribers.