Advertising sales growth propelled CBS Corp.'s
revenue and earnings to big gains in the second quarter.
Adjusted net earnings rose to $175.2 million, or 25 cents a share, up 180% from
$62.6 million, or nine cents, a year ago, the company said Tuesday.
Revenues rose 11% to $3.3 billion, led by an increase of 17% in local
broadcasting, 12% in its cable networks unit and 10% at its entertainment
division.
Total advertising sales were up 9%.
"CBS turned in terrific results in the second quarter of 2010," said
Sumner Redstone, executive chairman, CBS Corp.
"With top-line gains in all of our businesses, and a continued vigilance
on cost containment, revenues are translating more efficiently into
profits," said Leslie Moonves, president and CEO of CBS. "Our
large-market presence and dramatically improved cost structure make CBS a
leading beneficiary of the rebounding local advertising marketplace."
Moonves added that all signs point to ongoing growth and profitability in the
second half of 2010.
"The very healthy ad sales pacing we're seeing today indicates that the
recovery is continuing, and we expect a significant lift in political
advertising around the November elections," Moonves said. "Going
forward, we see continued and sustainable benefits from growth in retransmission
consent fees, expanded international distribution of our content and the vastly
improved economics of our NCAA deal, for many years to come."
CBS
generates about two-thirds of its revenues, so among the major media companies
it feels the most pain when the ad market falls, but also gets the biggest lift
when the market turns around.
In
the second quarter CBS' network ad sales were up 5% and in the scatter
market, prices were up 20% over their upfront levels, justifying CBS'
strategy of holding back about 35% of its inventory from the 2009-10 upfront to
sell in scatter.
In
the 2010-11 upfront, the market was stronger and CBS sold about 80% of its
inventory and CBS CFO Joseph Ianniello said the company sees that
strength continuing. Third quarter scatter pricing is up 30% above the upfront.
"Advertisers
who bought in the upfront will be very pleased," he said.
CBS
also touted some non-advertising revenue gains, starting with the Comcast
retransmission deal announced Monday.
"The
Comcast deal was a big win for both companies," said Moonves.
"We've
established that CBS will be paid for retrains, something that I've been
talking about for years and is a significant part of the future of our
company," he said. "We now have a dual revenue stream base for CBS
going forward,"
Moonves
also said that CBS was receiving retrains money from some of its affiliates.
"It's
a new way of doing business," he said. "We are providing premium
content. We should be paid by MSOs and affiliates."
Moonves
added that the Comcast deal also establishes a "growing revenue stream
for Showtime."
Showtime
was jolted two years ago when Paramount and other movie companies took their
films and formed their own premium channel, Epix.
"For
those who had any questions about the ability of Showtime to continue to
increase and thrive in the marketplace, Showtime is now secure and financially
in great shape," Moonves said.
The
domestic syndication business was also strong with revenue up 12%
For CBS' local broadcast group, revenues rose to $678.2 million from $579.5
million and adjusted Operating Income Before Depreciation and Amortization more
than doubled to $214 million from $105.3 million.
Moonves
said that on the local side, there were also no signs that business was slowing
down.
Ianniello said that local TV station revenues were pacing up
in the mid 20% range for the third quarter, excluding political. And he said
that fourth quarter political advertising could bring the total for the year
for political ads to $200 million.
