CBS Cable Nets Make Sharp Gains

CBS was not immune to the current weak TV advertising marketplace -- slipping in its second-quarter advertising revenues results from the same period a year ago. But it has high hopes for next year.

CBS was 3% lower to $1.59 billion in advertising during the second three months of 2015 -- due to the timing of NCAA Men’s College Basketball Tournament as well as the sale of an Internet business to China.

Just looking at the CBS network, its national advertising revenue was even versus the same level of year ago. CBS’ TV/radio stations had lower advertising revenues, in part from less political spending.

In an earning phone call on Wednesday, Les Moonves, president/CEO for CBS Corp. says the national TV advertising scatter market is improving, with automotive and healthcare advertisers buying now. CBS believes that shows strength.



“People want to buy a closer to when [a show] goes on,” says Moonves, which is why, he says, upfront volume was slightly down.

Entertainment division revenues slipped $1.79 billion from $1.84 billion. Affiliate and subscription fees -- which include retransmission revenues-- grew 50%.

CBS made some sharp gains from its cable networks -- Showtime Networks, CBS Sports Network and Smithsonian Networks -- grew 19% to $615 million in revenue. Showtime had its best pay-per-view boxing event ever during the period with the Floyd Mayweather-Manny Pacquiao fight.

All that pushed its cable networks group to a operating income of nearly that of CBS entertainment division -- to $220 million up from $213 million versus the second quarter 2014. Entertainment was at $262 million in operating income, down from $341 million in the second quarter 2014.

Local broadcasting slipped a bit in revenues $651 million from $665 million from a year ago. “We knew 2015 would be a challenge,” says Moonves. At the same time, he talked up a big 2016 for local TV stations -- especially with the sharply higher political ad spending estimated to climb $4.4 billion.

CBS’s TV stations fared better than its radio stations -- gaining 1% in revenue versus radio’s 5% decline.

Overall, CBS’ lifted revenue 1% to $3.22 billion; the company now says 50% of its revenue comes from advertising, down from a high of 70% or more years ago. Net earnings were down 24% to $332 million.

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