NEW YORK CBS Corp's quarterly profit more than doubled, beating expectations, as the media company reaped the benefits of new distribution deals for its TV shows and higher spending by advertisers.
CBS is a quintessential old media company, with a broadcast network, a billboard division, book publishing and radio, but it is finding new avenues of revenue in new media, specifically through streaming deals for its library of TV shows.
It has signed two deals with Netflix Inc -- one for domestic streaming and the other for international -- as well as a deal with Amazon.com Inc.
Chief Executive Les Moonves, speaking on a conference call, said future deals could be struck with Apple Inc, Google Inc, Microsoft Corp , and Dish Network Corp.
"Hit programing is more valuable than it has ever been," Moonves said, adding that "new possibilities are opening up all the time" for putting programs in front of viewers.
Those deals -- along with a solid TV lineup and strong advertising sales -- have helped make CBS a top choice with media investors. Its shares have risen 43 percent this year, far outpacing not only the broader Standard & Poor's 500 index, but every one of its major media competitors.
Its biggest risk, and the question most often raised during Tuesday's call, is whether the rocky U.S. economy will knock advertising spending off course.
Moonves said, "Obviously it's been a rough couple of days. But we are not feeling any of the sentiment that we felt three years ago," when advertising spending crashed.
At least through the second quarter, advertisers seemed undeterred by the shaky economy. Commercial rates in the scatter market, where advertisers purchase last-minute TV time, jumped by as much as 30 percent in the spring months.
CBS benefits from a TV lineup that has been steady and strong for years, with a roster of hits including "The Big Bang Theory," "The Good Wife," and "NCIS."
Second quarter ad revenue rose 3 percent from a year ago, when it was helped by 2010 political advertising and higher revenue for the college basketball's championships, known as March Madness. CBS said its new programing agreement for the basketball championships results in lower revenues, but higher profits.
Attitudes about the economic environment have worsened in recent days and weeks.
"There is always cause for concern from the macro impact," said Gabelli & Co analyst Brett Harriss. "That being said, CBS is on fire. I don't think we're at risk of seeing a dramatic pullback in advertising like we did in '08."
Overall, CBS's second quarter revenue rose 8 percent to $3.59 billion, surpassing the $3.55 billion analysts expected. Profit more than doubled to $395 million, or 58 cents a share, which also exceeded the 45 cents a share analysts polled by Thomson Reuters I/B/E/S has forecast.
The company had net income of $150 million, or 22 cents per share a year ago.
But CBS is clearly looking beyond advertising for additional revenue. One hot spot has been retransmission deals, wherein cable companies pay CBS a fee to carry the network's content. It also is banking on those new retransmission deals, particularly since the ones it has signed so far cover only a small sampling of its library of TV shows.
In the second quarter, revenue from content licensing and distribution deals rose 21 percent.
CBS shares fell $1, or 3.67 percent, to close at $26.28 on Tuesday in a broadly weaker stock market.
(Reporting by Paul Thomasch; editing by Robert MacMillan, Andre Grenon and Carol Bishopric)