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UPDATE 2-CBS profit gains on advertising, cable revenue
May 1, 2013 / 8:42 PM / 5 years ago

UPDATE 2-CBS profit gains on advertising, cable revenue

By Lisa Richwine

May 1 (Reuters) - Broadcaster CBS Corp reported a better-than-expected first-quarter profit, boosted by advertising during February’s Super Bowl telecast and a jump in revenue from Showtime and its other cable channels.

The company recorded $463 million in net earnings for the January through March period, a 17.5 percent increase from $394 million a year earlier, CBS said on Wednesday.

Adjusted earnings per share reached 73 cents, up from 59 cents last year. Analysts on average expected the company to report adjusted earnings per share of 68 cents, according to Thomson Reuters I/B/E/S.

CBS Corp owns the CBS broadcast network and cable channels such as Showtime and the CBS Sports Network, and book publisher Simon & Schuster.

The company’s revenue rose 6 percent to a record $4.0 billion in the quarter, CBS said. The Super Bowl, the year’s most-watched program on U.S. television, and other events including the Grammy awards helped lift advertising revenue by 8 percent.

The CBS network, with a stable of hit shows such as “The Big Bang Theory” and “NCIS,” leads rivals in total viewers this season and has pulled ahead in the 18-to-49 age group coveted by advertisers. CEO Leslie Moonves predicted the network will secure price increases in the “high single-digit to low double-digit” percentages when the network sells ad time during the big “upfront” sales period that starts in mid-May.

“We are going to enter this year’s upfront marketplace in a very enviable position,” Moonves told analysts on a conference call. Demand for ad time in the “scatter” market, time not sold in the upfront market, “is even stronger than it was at this time last year,” Moonves added.

For the quarter, cable networks revenue increased 6 percent as the channels gained subscribers and received higher fees from cable TV and satellite operators who carry the channels.

Morningstar analyst Michael Corty said CBS beat expectations with quality content that attracts advertisers while controlling non-programming costs. Excluding its outdoor advertising division, “their profitability improved in every division,” Corty said. “They keep expanding the margins even when the growth is not that great.”

CBS is taking steps to turn its outdoor business in the Americas into a publicly traded real estate investment trust, or REIT. Its outdoor advertising businesses in Europe and Asia are up for sale.

In recent quarters, CBS focused on diversifying revenues from its advertising-led business model, in part by selling content to online streaming services such as Netflix Inc . Revenue from streaming deals rose 19 percent in the first quarter.

Moonves said he was confident current deals with Netflix and Inc would be extended beyond their current terms. The CBS TV studio also is talking to Netflix about the possibility of producing a show for them, Moonves said.

Shares of CBS hit $47.00 in after-hours trading, up 1.3 percent from their earlier close at $46.40 on the New York Stock Exchange.

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