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CBS Reports Higher Adjusted 3Q Earnings

CBS reported higher earnings once you factor out the sale of its outdoor business a year ago. The company's revenues were down, but those that remained produced higher margins.

Net earnings were $426 million, or 88 cents a share, down from $1.6 billion, or $3.08 a share a year ago, when the company had gains from the spinoff of its outdoor business. Net earnings from continuing operations were $426 million, or 88 cents a share, up from 72 million, or 14 cents a share.

Revenues slipped to $3.26 billion from $3.37 billion. Network TV ad revenues were up 1%.

CBS pinned the drop on the timing of television licensing sales and decreases in lower-margin revenues, including the loss of the U.S. Open and lower pay-per-view revenues. The company said affiliate and subscription fees were up 9%, including a 50% increase in retransmission consent.

Adjusted earnings were above Wall Street expectations; revenue fell short.

"During the third quarter, we once again grew our profit and EPS while continuing to increase our investment in content and new distribution services," said CEO Les Moonves. "I'm particularly pleased with the gains we're seeing in network advertising, including underlying ad growth in the third quarter and even better pricing here in the fourth."

Looking ahead, Moonves added, "as viewers increasingly want to access and pay for content in new ways, we see continued increases in subscription revenue from our in-house over-the-top services at CBS and Showtime, as well as those from outside distribution partners. The good news is, no matter how quickly the industry changes – from big bundles to 'skinny' ones to a la carte – CBS is positioned to succeed."

Operating income for CBS' Entertainment division, which includes the CBS TV Networks and the television studio, was up 12% to $339 million. Revenue rose 1% to $1.93 billion. Advertising revenues were up 1% despite broadcasting fewer sporting events.

Cable network operating income fell to $246 million from $266 million. Revenues were down at $526 million compared to $624 million a year ago. A year ago, cable had significant streaming sales of Dexter and Californication and revenue from pay-per-view boxing events.

Income from local broadcast was down 9% to $174 million. Revenue was down 6% to $638 million.

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.