BENGALURU: CBS Corporation (CBS) reported a 2 per cent growth in revenue in Q3-2014 at $ 3367 million from $ 3302 million reported in the year ago quarter. However, 9M-2014 revenue fell 3 per cent to $ 10125 million from $ 10434 million in 9M-2013.
The company’s operating income before depreciation and amortisation (OIBDA) in Q3-2014 at $ 814 million was 2.4 per cent less than the $ 834 million in Q3-2013. 9M-2014 at $ 2477 million was 2 per cent lower than the $ 2527 million in 9M-2013.
Entertainment, Cable Networks, Publishing; and Local Broadcasting segments contribute to CBS numbers. Poor OIBDA results from CBS Entertainment segment which contributes a major portion to revenue and OIBDA, resulted in lower operating income.
Segment results
Entertainment
CBS Entertainment segment reported revenue growth of 1.4 per cent in Q3-2014 to $ 1911 million from $ 1884 million in Q3-2013. However, for 9M-2014, revenue at $ 6049 million fell 5.9 per cent from $ 6431 million in 9M-2013.
Entertainment segment’s OIBDA fell sharply by 22.3 per cent q-o-q to $ 335 million in Q3-2014 from $ 431 million. OIBDA during 9M-2014 fell 12.8 per cent to $ 1168 million from $ 1340 million in 9M-2013.
Cable Networks
This segment reported 4.7 per cent growth in revenue to $ 624 million in Q3-2014 from $ 596 million in the corresponding year ago quarter. Revenue during HY-2014 at $ 1677 million was 5.3 per cent more than the $ 1592 million in 9M-2013.
OIBDA from this segment rose 4.2 per cent to $ 272 million in Q3-2014 from $ 261 million in Q3-2013. During 9M-2014, OIBDA from CBS Cable Network segment rose 7.3 per cent to $ 750 million from $ 699 million.
Publishing
CBS Publishing segment saw a 11.2 per cent fall in revenue to $ 199 million in Q3-2014 from $ 224 million in Q3-2013. Revenue from this segment fell 3.6 per cent to $ 563 million in 9M-2014 from $ 584 million in 9M-2013.
OIBDA for publishing segment remained flat at $ 43 million in Q3-2014 and Q3-2013. For 9M-2014, OIBDA was 5.3 per cent more at $ 80 million as compared to the $ 76 million in 9M-2013.
Local Broadcasting
Revenue from this segment increased 6.1 per cent to $ 680 million in Q3-2014 from $ 641 million in Q3-2013. Revenue from local broadcasting in 9M-2014 fell by a 0.3 per cent to $ 1971 million from $ 1977 million in 9M-2013.
OIBDA for this segment rose 18.2 per cent in Q3-2014 to $ 214 million from $ 181 million in Q3-2013. 9M-2014 OIBDA rose 2.7 per cent to $ 652 million from $ 635 million in 9M-2013.
Company Quotes
“CBS continues to succeed on the strength of its tremendous content,” said CBS executive chairman, Sumner Redstone. “Les and his team are optimising the Company for future growth at every turn, and I have the utmost confidence in their ability to increasingly drive shareholder value in these dynamic times of great opportunity.”
“Our third quarter growth reflects the success of our efforts to create and monetize our premium content,” said CBS president and CEO Leslie Moonves. “I am particularly pleased with the CBS Television Network’s encouraging start to the fall season, which has reloaded our owned content pipeline in a big way with Madam Secretary, Scorpion, and NCIS: New Orleans, along with new owned hits from Showtime and The CW. Our local businesses had a strong quarter as well, including increasing political spending and higher retransmission consent fees. Also during the quarter, we renegotiated new station affiliate contracts with LIN Media, Tribune Broadcasting, Media General, and Gray Television with more to come later this year, bringing us that much closer toward our stated goal of $ 2 billion in retransmission consent and reverse compensation revenues by 2020. We are also capitalizing on growing consumer demand by expanding into emerging platforms. This includes the recent launch of CBS All Access, which allows our "super fans" to watch CBS wherever they are. At the same time, we are returning more value to shareholders than ever before, and we continue to have great confidence in our future as a content company in this ever-expanding marketplace.”
Company speak
Revenues of $ 3.37 billion for the third quarter of 2014 increased 2 per cent from $ 3.30 billion for the same quarter a year ago. This growth was driven by a 4 per cent increase in content licensing and distribution revenues from higher international and domestic licensing of television programming.
Advertising revenues grew 2 per cent, driven by the broadcast of Thursday Night Football on CBS and political revenues associated with midterm elections. Affiliate and subscription fees were even with the third quarter of 2013, because of a significant pay-per-view boxing event a year ago that affected the revenue stream comparison by six percentage points. Cable affiliate fees, retransmission revenues, and fees from CBS Television Network affiliated stations all continued to grow in this year's third quarter.
Adjusted OIBDA of $ 814 million was down 2 per cent as a result of an increased investment in television programming, mainly associated with new contracts with the National Football League (“NFL”). The investment in NFL programming contributed to the successful launch of three new CBS-owned television series in the 2014/2015 television broadcast season, which all generated higher ratings in their respective time periods compared with the prior year.
Adjusted net earnings from continuing operations were $ 400 million for the third quarter of 2014 compared with net earnings from continuing operations of $ 431 million for the same prior-year period. The decline primarily reflects the higher programming investment as well as losses of $ 23 million ($ .04 per diluted share) associated with changes in foreign exchange rates. Adjusted net earnings from continuing operations per diluted share for the third quarter of 2014 grew 6 per cent, to $ .74, from diluted net earnings per share from continuing operations of $ .70 for the same quarter in 2013.
The increase was driven by lower weighted average shares outstanding from the split-off of CBS Outdoor Americas Inc. (“Outdoor Americas”) on 16 July 2014, as well as the Company’s ongoing share repurchase programme.
Operating income was $ 668 million for the third quarter of 2014 compared with $ 764 million for the same prior-year period. Operating income for the third quarter of 2014 included restructuring charges of $ 26 million and a noncash impairment charge of $ 52 million in connection with a radio station swap. Net earnings from continuing operations were $ 72 million for this year's third quarter compared with $ 431 million for the same quarter a year ago. In addition to the items above, net earnings for the third quarter of 2014 included a loss on early extinguishment of debt of $ 219 million, net of tax ($ .40 per diluted share), associated with the Company's debt refinancing and a discrete tax item of $19 million. Adjusted results exclude the impact from all of these non-comparable items.
Net earnings per diluted share of $3.03 for the third quarter of 2014 include a gain of $1.56 billion recognised in connection with the split-off of Outdoor Americas.
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