CBS will break financial records in 2012, Leslie Moonves predicts
CBS Corp. might be a titan of old media, but its first-quarter earnings were boosted by gains in new media: the digital distribution of its television programming and the sale of e-books.
"The growth in digital is a positive development for us," CBS Chief Executive Leslie Moonves told Wall Street analysts in a conference call Tuesday to discuss earnings. "We are extremely pleased with our first quarter. We broke records in five key financial metrics for the quarter, and I’m confident we will break records for the year as well."
The New York-based broadcasting company beat analysts' estimates by reporting 80% higher net earnings. The company earned $363 million, or 54 cents per diluted share, up from $202 million, or 29 cents per diluted share, compared to the year-earlier period. The substantially higher margin came from growth in operating income as well as lower weighted average shares as a result of the company's stock repurchase program.
For the quarter ended March 31, CBS collected revenue of $3.92 billion, an increase of 12% from the first quarter of 2011.
CBS attributed the increase to content licensing, particularly its online distribution deals with Netflix and Amazon.com, and higher fees paid by cable and satellite TV operators for the retransmission of CBS' broadcast signal. Content licensing and distribution revenue soared 39%.
"There are a lot of players out there circling the building," Moonves said. "They need our content. It's an exciting period of time."
Advertising revenue, company wide, was up 5%. At its flagship CBS broadcast network, ad sales were up 8%. The network, according to Moonves, is expected to end the TV broadcast season with ratings gains in key demographic groups: total viewers, viewers age 18 to 49 and viewers age 25 to 54.
“With 18 shows already renewed, the competition to get onto our schedule is extremely strong -- meaning that we will be much more selective than our competitors will have to be," Moonves said. As the company heads into the upfront advertising sales season, Moonves said, "We feel very good about our future -- both creatively and financially."
Investors have been expecting CBS to post a strong year -- lifted by hundreds of millions of dollars in political spending expected to flood the company's TV and radio stations. CBS shares closed Tuesday at $33.42, up 4 cents. The shares are trading 33% higher than last year at this time.
In addition to the CBS television network, which broadcasts such popular shows as "NCIS," "Survivor," "Hawaii Five-0" and "Two and a Half Men," CBS owns television and radio stations, a billboard unit, premium cable channel Showtime, and the Simon & Schuster publishing house.
The company said it spent $269 million to buy back 9 million of its shares in the first quarter. The company also sold a radio station group in the mid-sized market of West Palm Beach, Fla., as part of its strategy to own stations in the nation's largest markets.
-- Meg James
Photo: CBS Corp. board member Arnold Kopelson, Chairman Sumner Redstone and CBS Chief Executive Leslie Moonves in March. Credit: Alex J. Berliner / ABImages