CBS profit tops expectations despite ad sales drop
LOS ANGELES (Reuters) - CBS Corp's (CBS.N) quarterly profit beat forecasts as the company recorded higher affiliate and subscription revenue at its TV networks and cut costs to offset a dip in advertising sales.
The also company said on Thursday its networks will benefit from demand for political commercials ahead of the November U.S. president election, while its outdoor advertising business will receive a lift from the London Olympics.
"We're confident 2012 will be a record year, and we will produce exceptional results in 2013 and beyond," CBS Chief Executive Les Moonves said in statement.
Net income for the second quarter rose to $427 million, an 8 percent gain from a year earlier. Earnings per share rose 12 percent to 65 cents, beating analysts' average forecast of 59 cents, according to Thomson Reuters I/B/E/S.
"CBS continues to post solid results," Morningstar analyst Michael Corty said. "Among the broadcasters, it is the network that remains dominant."
CBS shares fell 0.12 percent to $330 in after-hours trading, down from its earlier close of $33.04 on the New York Stock Exchange.
The CBS broadcast network is the highest-rated U.S. broadcast channel in terms of overall viewers, propelled by hits such as comedy "The Big Bang Theory" and drama "NCIS." The company also operates Showtime and other cable networks.
In recent quarters, CBS has focused on diversifying revenues from its advertising-led business model. The company has pushed for carriage fees from cable, satellite and phone TV distributors.
An 8 percent gain in affiliate and subscription revenue helped lift the quarter that ended in June, along with cost cutting that improved profit margins.
"Even with an uneven economy, our financial health is superb, our content is at the top of its game, and the opportunities in front of us are enormous," Moonves told analysts on a conference call.
Overall revenue fell 3 percent from a year earlier to $3.5 billion. The company said the decline stemmed from tough comparisons to the first year revenue from a multi-year streaming deal last year and the NCAA basketball championships, which this year fell in an earlier quarter. Advertising revenue dropped 4.5 percent to $2.1 billion.
Moonves said he had been approached by potential buyers for the company's outdoor advertising business, but was "not actively" trying to sell it.
"We are very pleased with how it's performing," Moonves said, adding that "if somebody came along with the right price, we would have to take a serious look at it."
(Reporting By Lisa Richwine; Editing by Steve Orlofsky, Richard Chang and Bernard Orr)
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