CBS Corp (CBS.N) on Tuesday posted better-than-expected profit driven by healthy advertising growth and increases in carriage fees at its cable and broadcast networks, and also a big boost from licensing shows to online video partners like Netflix Inc (NFLX.O).
Chief Executive Les Moonves guaranteed investors that the flagship network CBS, the number one U.S. broadcaster, would not only sell the biggest volumes of advertising at this year's Upfronts but would also have the highest rates -- also known as CPMs.
Executives said it is already seeing a strong performance at its local stations thanks to a rebound in advertising from the automobile and retail sectors.
CBS, which has traditionally had an advertising-led business model across national and local TV, radio and outdoor billboards, has focused in recent quarters on diversifying revenues in an evolving media sector.
That has seen CBS pushing partners for new carriage fee revenue from cable, satellite and phone TV distributors as well as from local broadcasters.
The company has also better-positioned itself as a key content producer with partnerships for new Web platforms like Netflix and Hulu.
The quarter was boosted by the sale of content to the digital partners, which Moonves described as "adding meaningful and high margin dollars" to CBS' bottom line.
Both CBS' Entertainment unit and its cable networks unit licensed shows to digital partners. While CBS licensed much older library shows, Showtime licensed more recent former cable hits like Sleeper Cell and early episodes of Dexter.
"These were great results," said Brett Harriss, an analyst at Gabelli & Co. "We knew there was streaming revenue coming this quarter for the Entertainment business but we were surprised by the digital revenue at cable."
Moonves told investors that his company was having numerous conversations with digital partners trying to license CBS shows including potential new entrants like chipmaker Intel Corp (INTC.O) and traditional cable distributors like Comcast Corp (CMCSA.O).
First quarter net income rose to $363 million, or 54 cents a share, up from $202 million, or 29 cents a share a year ago.
Analysts had on average been expecting profit around 44 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 12 percent to $3.92 billion.
Advertising revenue overall rose by 5 percent.
The quarter was helped by a 16 percent revenue jump at its flagship broadcast network CBS, which holds the number one spot in the United States.
(Reporting by Yinka Adegoke; Editing by Bernard Orr)