CBS Q1 2015 Earnings Beat Expectations

Company hits record in earnings per share

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CBS Corp. reported its earnings for the first quarter of 2015 on Thursday, surpassing Wall Street expectations.

The company reported $3.5 billion in revenues for the quarter, off slightly from the $3.57 billion that it reported for the same quarter last year. The company attributed the dip to broadcasting one less NFL game this quarter than it did in the equivalent quarter last year, as well as decreased ad revenues from the company’s local broadcasting segment.

Due to higher investment in sports and entertainment programming, operating income was also down, falling $702 million versus $791 million in the equivalent quarter last year. That drop in advertising revenue also affected net earnings from continuing operations, which fell from $462 million in the first quarter of last year to $394 million for this quarter.

In the entertainment segment, which includes the CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive and CBS Films, revenues for the quarter were $2.26 billion, versus $2.3 billion for the equivalent quarter last year, due to one less NFL playoff game this year. However, that loss was offset by higher revenues from affiliates and subscription fees.

Revenues from the company’s cable networks, a group that includes Showtime Networks, CBS Sports Network and Smithsonian Networks, ticked up over the same quarter from last year, with $539 million versus $537 million. The uptick was attributed to growth in affiliate rates, as well as international licensing of Showtime series.

On the local broadcasting front, revenues dipped 5 percent from the first quarter of 2014, down to $596 million, due to lower advertising revenues, particularly from the entertainment and retail industries.

The company reported diluted earnings per share of 78 cents for the quarter, a record for CBS Corp. Analysts had placed their estimates in the 75 cents range.

CBS Corp. president and CEO Les Moonves touted success on the retransmission front, among other factors, while announcing the earnings.

“We had terrific first-quarter results in streaming, both internationally and domestically, as well as retransmission consent and reverse compensation, which are steadily making their way toward $2 billion in revenue by 2020 if not before,” Moonves said.

During an earnings call on Thursday, Moonves discussed the company’s pay streaming service CBS All Access, which launched six months ago, noting, “We are very pleased, it’s exceeding expectations.” By the fall, Moonves said, “we expect to have virtually the entire country covered with” the service.

Moonves also dismissed the notion that the shift in advertising dollars toward digital platforms is drawing revenue away from the traditional television model, at least not as far as CBS is concerned.

“We do not see it as affecting the broader-based television network platform,” Moonves noted. “We are not seeing a shift out of network.”