By Joe Flint And Tess Stynes
CBS Corp. boosted its revenue slightly in the second quarter,
thanks to higher distribution fees for its content from pay-TV
operators and its own affiliates and the r ecord-breaking
pay-per-view telecast of the Mayweather-Pacquiao fight.
Excluding restructuring-related charges and other items,
earnings from continuing operations were 74 cents a share. Revenue
increased 1% to $3.22 billion. Analysts polled by Thomson Reuters
expected per-share profit of 72 cents and revenue of $3.21
billion.
But investments in programming and new digital distribution
initiatives like Showtime's streaming service weighed on net income
as CBS tries to chart future paths for growth. Also dragging on
results was a 10% drop in content and licensing revenue and a 3%
decline in advertising revenue.
Overall, CBS reported net income of $332 million, or 67 cents a
share, down from $439 million, or 76 cents a share, a year
earlier.
CBS was bullish on future advertising sales heading into a year
when it broadcasts the Super Bowl and benefits from a U.S.
presidential election.
On a conference call with analysts, CBS Chief Executive Leslie
Moonves said advertisers are paying as much as a record $5 million
for a 30-second spot in Super Bowl 50, which CBS will air in
February. Last season, the most an advertiser paid for a commercial
during NBC's coverage of the game was $4.5 million.
The Super Bowl isn't the only thing CBS is excited about. The
2016 election should be a windfall in political advertising for the
company's local TV stations. "The coming election cycle will
clearly trump everything we've seen before," cracked Mr.
Moonves.
In the second quarter, an increase in subscription fees and
revenue from the Floyd Mayweather-Manny Pacquiao fight helped CBS
overcome a soft advertising environment. CBS's pay-TV channel
Showtime was a partner with Time Warner Inc.'s HBO on the fight,
which grossed more than $600 million dollars.
"Floyd Mayweather did better than CBS did," Mr. Moonves
said.
For the second quarter, entertainment revenue--which includes
the broadcast network, CBS Television studios and CBS
films--was$1.79 billion, down 2.7% from a year ago. Cable revenue,
which includes Showtime, was up almost 20% to $615 million. The CBS
TV and radio station group posted a 2% decrease in revenue to $654
million, attributed to a decline in advertising.
CBS touted that it is safer from so-called cord-cutters than its
media rivals. Stocks of several media companies including Walt
Disney Co. and Time Warner Inc. were pounded Wednesday by investors
worried about pay-TV channels being hurt by people dropping cable
and satellite TV in favor of cheaper Internet options. CBS shares
fell 4.6% to $50.42 on Wednesday, and then dropped another 1.8% in
after-hours trading to $49.50.
"The broadcast business is in better shape than basic cable,"
Mr. Moonves said, adding that CBS has its own online offering in
CBS All Access and that its popular programming will make it
must-have for any so-called skinny bundles of channels sold by
pay-TV distributors.
Mr. Moonves also noted that next year CBS will surpass $1
billion in fees from distributors and its own affiliates for the
network's content. That is a year earlier than CBS had forecast.
"He who has the most viewers gets paid the most money," Mr. Moonves
said.
Write to Joe Flint at joe.flint@wsj.com and Tess Stynes at
tess.stynes@wsj.com
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