The company, led by acting CEO Joe Ianniello, is expected to complete the recombination with Viacom in early December.
CBS Corp., which is expected to complete the recombination with Viacom in early December, reported lower third-quarter revenues on Tuesday that exceeded Wall Street estimates despite increased content spending and its growing streaming services.
The company, led by acting CEO Joe Ianniello, reported adjusted earnings of $ 0.95 per share, versus $ 1
Third quarter operating income of $ 501 million compared to $ 690 million for the same period last year and "included costs incurred during the third quarter in connection with the ongoing merger with Viacom." Adjusted revenues fell 21 percent to $ 581 million from $ 736 million for the prior year "as a result of increased content investment, including a larger number of series produced for multiple platforms, as well as the company's direct to consumer power services."
The third quarter hit $ 3.30 billion, up 1 percent, compared to an estimate of $ 3.37 billion. "Revenue from connection and subscription fees increased by 12 percent, driven by an increase in fees from affiliate stations and affiliated stations to CBS Television Network, as well as growth from the company's streaming services directly to consumers," the company said. "Revenue licenses and distribution revenues increased by 1 percent, mainly as a result of increased sales of series produced for third parties."
Advertising revenue fell as expected by 7 percent from Q3 2018, as the company had "record policy ad sales driven by interim elections in 2018." But Ianniello highlighted "solid underlying network growth of 2 percent during the quarter."
The results came even when ratings for CBS broadcast networks were down in the third quarter. Bernstein analyst Todd Juenger, in his earnings preview, wrote: "Conventional C3, adults 18-49 first-time audiences for the major broadcast networks were down 13 percent" from the year before in the third quarter. "CBS was down even further (18 percent), with part of the underperformance driven by blackout with AT&T, which lasted from July 20 to August 9, as well as Nexstar CBS affiliates, which lasted from the beginning of the quarter to the end of August. "
Meanwhile, CBS Corp.'s streaming services, CBS All Access and ShowTime, were expected to make gains in the recent period thanks to such shows as CBS All Access & # 39; Why Women Kill . And continued profit gains were also expected to increase results, as they did.
"We delivered record revenue for the third quarter as we continue to increase our premium content investment and direct streaming to consumer streaming services, which is the cornerstone of our growth strategy," said Ianniello. "During the quarter, we grew directly into CBS All Access Consumer Revenue and Showtime OTT 39 percent from last year, driven by a strong slate of original programming, meanwhile, revenue for retrans, reverse comp and virtual [distributor] increased 18 percent, and our total affiliate and subscription fees grew 12 percent, representing more than a third of our total revenues in the third quarter. "
He added:" Our revenue recognition revenue is also growing as we increase programming production for all of our platforms, including five new hit shows that we just launched on the largest platform in the media , CBS Television Network, which is about to end the season as the most viewed network for the 12th consecutive year . "
Looking at the end of the period, Ianniello said:" In the fourth quarter we have a fantastic programming schedule at Showtime, including recurring favorites Shameless and Ray Donovan along with a number of exciting new series, for example The L Word: Generation Q . So we are building a huge momentum as we approach the merger with Viacom and move into 2020. ”
Much of Tuesday's earnings conference is expected to focus on the CBS assets' prospects during the recombined ViacomCBS, which is expected to be formed when the mega deal with Viacom ends around the beginning of December.