After accounting for a charge on its radio division which cut net income, CBS operating income was up in the second quarter on a big gain in revenue.
Net income was $58 million, or 14 cents a share, down from $423 million, or 93 cents a share a year ago. The earnings were affected by a $365 million non-cash charge on the CBS Radio division, which is being sold. Adjusted net earnings rose slightly to $427 million from $423 million and operating income was up 3%.
Revenues rose 9% to $4.4 billion. Affiliate and subscription fees were up 16%, driven by a 25% increase in retransmission fees.
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Advertising revenues were up 4%, boosted by the return of the NCAA college basketball Final 4 and championship game.
The earnings and revenue numbers exceeded Wall Street forecasts.
“CBS delivered outstanding second quarter results while continuing to take a number of steps to achieve our long-term financial goals,” said CEO Les Moonves.
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“First, we had a terrific upfront with gains in pricing and volume, including more and more deals that better reflect how people are watching our programming on a delayed basis. In addition, we took significant steps during the quarter to grow our affiliate fees from both traditional and ‘skinny’ bundles,” he said.
Moonves said that the company’s over-the-top stand-alone streaming services CBS All Access and Showtime OTT are growing faster than expectations and will reach a combined 4 million subs by year end. CBS will be expanding All Access into international markets starting with Canada in 2018.
“So, 2017 is turning out to be a great year for the CBS Corporation even without the Super Bowl and political spending that we had in the prior year. And as we look ahead, we are positioned to have an even better year in 2018," Moonves said.
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The company noted that CBS Radio is classified as held for sale and therefore, in accordance with accounting guidance, the carrying value will continue to be adjusted based on the trading price of Entercom’s stock, which could result in future gains or losses.
Operating income dipped 1% for CBS’s Entertainment unit, which includes the CBS Broadcast Network, to $346 million from $351 million. Revenues were up 12% to $2.184 billion from $1.947 billion. The revenue growth was driven by affiliate and sub fees, plus subscriber growth at CBS All Access. Advertising revenues were up 6%.
CBS’s cable operations had operating income of $253 million, up front $227 million a year ago. Revenues rose to $571 million from $536 million.
Operating income at CBS’s local media unit fell 2% to $127 million from $130 million a year ago. Revenues rose to $412 million from $396 million.
