CBS Profit Beats Estimates on Super Bowl, Streaming Gains
CBS Corp. (CBS), owner of the most-watched U.S. television network, reported first-quarter profit that beat estimates as Super Bowl ads, fees from cable systems and streaming deals with Amazon.com Inc. (AMZN) boosted revenue.
Net income from continuing operations rose 18 percent to $463 million, or 73 cents a share, from $394 million, or 59 cents, a year ago, New York-based CBS said yesterday in a statement. Analysts had forecast 68 cents, the average of 27 estimates compiled by Bloomberg.
CBS and other broadcasters are collecting more fees from pay-TV systems that carry their signals, and taking a share of the payments received by network affiliates. So-called retransmission revenue rose 62 percent in the quarter, CBS said. The network also sold “The Good Wife” reruns to Amazon.com, Hulu and the Hallmark Channel. Advertising rose 8 percent, driven by the Super Bowl.
“Their advertising revenue growth was well above what we have seen so far this quarter from other media companies,” said Paul Sweeney, director of North American Research at Bloomberg Industries. He called it a “solid beat for CBS this quarter.”
Sales rose 6.4 percent to $4.04 billion, beating the $4.02 billion average of 24 analysts’ estimates. Streaming revenue grew by 19 percent.
CBS, controlled by Chairman Sumner Redstone, rose 1.1 percent to $46.90 in extended trading yesterday after the results. The shares advanced 1.4 percent to $46.40 at the close in New York and have climbed 22 percent this year, compared with an 11 percent gain for the S&P 500 Index.
CBS avoided losing sales by staying on the air during a power outage at the Feb. 3 Super Bowl, the most-watched U.S. TV event. By covering the interruption commercial-free, the network was able to meet its commitments and broadcast ads when the game resumed. The contest, which rotates among networks each year, helped lift CBS’s average audience to 12 million a night for the season ending this month, based on Nielsen data.
Affiliate and subscription fees rose 14 percent, according to the company. That includes retransmission fees from Time Warner Cable Inc. (TWC), Comcast Corp. and other pay-TV operators, and payments passed through from affiliates.
Retransmission and affiliate payments were estimated to almost double to $102 million for the quarter, Michael Morris, an analyst at Davenport & Co., wrote in an April 26 research report.