Digital streams boost CBS profit in second quarter
Digital streams of CBS Corp.'s older television shows are trickling down to its bottom line.
CBS on Tuesday soundly beat analysts' expectations by reporting profit that more than doubled to $395 million, or 58 cents a share, for the quarter ended June 30. That compared to $150 million, or 22 cents a share, for the year-earlier period.
Revenue for the broadcasting giant was up 8% to $3.6 billion.
Analysts polled by Thomson Reuters had predicted that New York-based CBS would post earnings of 46 cents a share and revenue of $3.6 billion.
"Across every key financial metric, we turned in a stellar performance," CBS Chief Executive Leslie Moonves told analysts during an afternoon conference call. "At the heart of all this success is great content."
The company is capitalizing on its vast library of TV programs in an attempt to squeeze more money from older shows in the newly-created digital streaming window. This year it began negotiating deals for the streaming rights to its older titles -- including "Star Trek," "Frasier" and "Medium"-- with Netflix and Amazon.com Inc.
CBS is profiting "without taking away from established revenue streams," Moonves said.
CBS does not make available its current hit series such as "Hawaii Five-0" and "NCIS" to digital streaming services. The company guards those programs to protect its ratings for network runs and the all-important advertising revenue that those ratings bring.
During the quarter, the company's entertainment division -- which includes the CBS television network -- saw its revenue jump 10%. The increase was driven by a number of factors, including the company's digital stream licensing agreement with Netflix, a cable syndication sale of the Kelsey Grammer sitcom "Frasier," and higher retransmission fees paid by cable operators and TV stations.
The CBS broadcast network brought in higher advertising revenue in the quarter. The company also benefited in the quarter by sharing the costs of the NCAA basketball tournament broadcasts with Turner Broadcasting.
The deal with Turner brings CBS less advertising revenue from the tournament, but lower production costs and higher profits.
-- Meg James
Photo: Kelsey Grammer as "Frasier." Credit: Gale Adler / Paramount Pictures