CBS: Scatter Market Has Picked Up, Overall Ad Revs Dip

CBS says the fourth-quarter scatter TV advertising market is picking up, with strong results.

Les Moonves, president/chief executive officer of CBS Corp., said in an earnings phone call that the current scatter marketplace is “remarkable” and that “it has swung back in a big way.”

Moonves says CBS is taking advantage of this because CBS sold less inventory in the upfront market this past summer. He did  not go into price/volume specifics.

Many TV networks showed some weakness in the overall TV advertising market during the upfront, with lower revenue. Moonves blames some of this on a massive number of media reviews occurring just around the upfront market, causing some pullback.

The fourth-quarter scatter market is the strongest the company has seen in years, says Moonves. So much so, he says, that CBS sales reps “are beating down the door to remove promo [TV show inventory] to put in more advertising inventory.”



CBS is also optimistic about near-term TV advertising conditions -- which include the upcoming Super Bowl in 2016, as well as higher political advertising from next year’s presidential election.

With regard to its OTT Internet platform, CBS All Access, Moonves says the company is considering a no-advertising option -- for example, at perhaps $9.99 a month. This would be an option to the current advertising-supported $5.99-a-month price for the digital service.

CBS Television Network advertising revenues grew 1% in the third quarter -- all this, the company says, against fewer sporting events versus the same period a year ago. But the company says “underlying” advertising revenues at the networks were 8% higher versus the same time period a year ago.

CBS says technology and telecom marketers were major advertising performers during the period.

Non-advertising revenue continues to grow at an even faster rate -- particularly from retransmission fees and reverse compensation fees from TV stations, which was up 50% in the third quarter. Moonves says this is well on its way to exceeding $1 billion next year.

For the third-quarter reporting period, CBS pulled in $3.26 billion -- down 3% from $3.37 billion. Net income was $426 million versus $1.6 billion in the third quarter of 2014. However, net income from continuing operations was $426 million versus $72 million.

Company-wide advertising revenues was down 4% to $1.5 billion during the period. CBS’ content licensing business was off 8% to $1.05 billion. Subscription/affiliate fees grew 9% to $664 million.

CBS entertainment revenues -- its network, stations and film business -- were up 1% to $1.93 billion, largely due to higher affiliate/subscription fees.

Local broadcasting -- television and radio -- also slipped. This was down 6% to $638 million, due to fewer sporting events and lower political advertising revenues.

Cable networks -- Showtime, CBS Sports Network and Smithsonian Networks -- were down $526 million from $624 million. A year ago, there were big streaming sales of Showtime’s “Dexter” and “Californication.”Publishing business -- Simon & Schuster -- was up 2% to $203 million.

After-market trading of CBS stock was up 2% to $49.30.

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