CBS, owner of the most-watched television network in the U.S., posted a 3% increase in fourth-quarter revenue thanks, in part, to increased advertising sales around its Thursday night football programming. However, the broadcaster’s full-year revenue fell compared with 2013. Here are the key points from Thursday’s quarterly earnings report:
What you need to know:
A slight uptick in fourth-quarter ad sales helped propel CBS (CBS) to record fourth-quarter revenue of $3.68 billion, up from $3.57 billion in the same quarter a year earlier. Analysts had predicted revenue of $3.65 billion for the quarter. Quarterly profits fell more than 12%, to $413 million, or 80 cents per share.
The company’s entertainment division, which includes the CBS broadcast network, saw a 2% revenue increase, to $2.3 billion, in the quarter. Revenue for CBS’ cable unit, including the cable channel Showtime, grew by 5%, to $499 million.
Full-year revenue for 2014 fell to $13.8 billion from $14.01 billion in 2013 as advertising revenue fell by 4%. The company blamed the decline on 2013 financials getting a lift from ad sales for the Super Bowl, which it broadcast that year, but has not done so since. Full-year profits grew 57% year-over-year, to $2.9 billion, or $5.38 per share. The company’s annual profits got a boost from last summer’s spin-off of advertising company CBS Outdoor Americas.
Shares of CBS rose by nearly 3% in after-hours trading.
The big number: In the fourth quarter, CBS’ advertising revenue climbed 4% from a beefed-up slate of Thursday night NFL games during the 2014 season. The company expects the gains to continue because it plans to bring back Thursday Night Football after the NFL season starts up while also broadcasting the next Super Bowl in the current fiscal year’s fourth quarter.
CBS reportedly paid $275 million for the rights to NFL games last year and then charged nearly $500,000 per 30-second advertising spot during the games, according to Reuters. During a call with analysts Thursday evening, CEO Les Moonves hinted that CBS could charge as much as $6 million for a similar spot during next year’s Super Bowl.
The company also said increased retransmission fees, which broadcasters receive from cable and satellite television providers, helped spark an 11% bump in affiliate and subscription revenue in the fourth quarter.
What you might have missed: CBS introduced its first standalone online content streaming service, CBSN, in November. The company said in January that the service was already the top news outlet watched on Roku streaming devices, where a large chunk of the service’s viewers are found. Moonves said Thursday that the streaming service has so far “exceeded our expectations” and he further teased the potential availability of a standalone streaming service around its Showtime cable content. Such a service would follow in the footsteps of HBO Go, a similar offering from cable rival Time Warner’s HBO.
In November, Moonves said that a standalone Showtime service could become available sometime in 2015. But he made only vague comments about it Thursday, saying there are “various permutations we’re working at.”
More and more broadcasters have been embracing the so-called over-the-top content services by offering alternatives to traditional broadcasting. In addition to CBSN and HBO Go, Dish Network recently launched Sling TV, which offers a handful of live-streaming channels in a bundle that costs $20 per month.
One item that was not discussed on Thursday’s earnings call was the rumor of a potential combination of CBS and Viacom, both of which are majority-owned by billionaire Sumner Redstone. Moonves is reportedly against such a merger due to Viacom’s poor financial and ratings performances of late as well as the potential for a power struggle with Viacom CEO Philippe Dauman. The New York Post reported last week that Moonves could even attempt to buy Redstone’s CBS shares to avoid such a combination.
