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Moonves High on CBS as It Reports Boost in Profits

CBS reported higher earnings as it awaited the fate of its CEO Les Moonves.

Moonves spoke on the company’s earnings call Thursday and was upbeat about the company’s financial outlook.

Second quarter net earnings were $400 million, or $1.06 a share, compared to $58 million, or 14 cents, a year ago. Net earnings from continuing operations were $400 million, up from $397 million.

Related: Article Charges Moonves With History of Harassment

Revenues were up 6% to a record $3.47 billion.

CBS’s board on Wednesday said it had hired two law firms to investigate published charges that Moonves engaged in improper activities with women before and during his career at CBS. The law firms will also be looking at CBS News and the company’s overall culture.

Moonves and other execs did not address the investigation during the earnings call.

The company had $15 million in costs related to evaluation of a potential combination with Viacom, being urged by National Amusements.

CBS and National Amusements, the investment company owned by the Redstone family are engaged in a legal battle over control of CBS.

Advertising revenue increased 2% despite the NCAA basketball Final Four and Championship games airing on Turner instead of CBS. CBS ad total includes the Australian Network Ten, acquired last year.

“CBS’ strong second quarter puts us firmly on track to deliver the record full-year results we have forecast,” said Moonves in a statement. “During the quarter, each of our three revenue types enjoyed solid growth, led by affiliate and subscription fees, where we continue to see healthy gains in both traditional distribution and new digital platforms. Once again, our total subscriber base — including retrans, virtual MVPDs, and our own direct-to-consumer streaming services — continues to grow, and our average rate per sub is increasing as well.

Moonves said that CBS’s over-the-top products, CBS All Access and Showtime OTT, are exceeding their original expectations of reaching 8 million subscribers combined by 2020. He said CBS expected them to hit 8 million by 2019, and issues a new prediction that they would have 16 million domestic subs by 2020.

“In addition, advertising continues to grow as well, up 2% for the quarter. And we recently concluded another terrific upfront with solid increases in pricing and volume, including dramatic growth in digital volume, reflecting the power of our programming on the CBS Television Network. Plus, we expect to have strong gains in the back half of the year at our local business with the midterm elections in the fall,” Moonves said. “Looking ahead, we are set up for continued growth in 2018, and we feel more confident than ever that CBS is uniquely positioned to succeed as a direct-to-consumer global content company.

Operating income for CBS’s entertainment division increased 1% to $356 million as higher revenues were mostly offset by increased investment in content and digital initiatives.

Revenues were up 8% to $2.37 billion. Affiliate and subscription fees were up 38%, including increases from CBS All Access and virtual MVPDs.

Adjusting for the shift of the NCAA Final Four games, CBS Network advertising revenues were up 1%.

Cable network operating income increased to $256 million from $255 million. Revenue rose 4% to $591 million.

Local media operating income was $128 million, flat compared to last year. Revenues were up 2% to $420 million