CBS Misses Revenue Estimates Despite Jolt From Super Bowl -- 2nd Update

By Micah Maidenberg and Benjamin Mullin 

CBS Corp. said the Super Bowl bolstered its advertising results, helping push up its first-quarter profit, but the media company missed revenue expectations amid a weaker performance in its cable networks business.

The advertising gains highlight the importance of live sports for CBS's broadcast operations. Executives have already started discussing a new deal with the National Football Association, even though its deal with the league runs through 2022.

The New York-based company on Thursday also said revenue from its direct-to-consumer streaming services reached a record level, with subscribers to its CBS All Access product and its Showtime OTT streaming service growing 71% from a year earlier.

During a conference call, CBS acting Chief Executive Joe Ianniello said the company plans to spend $8 billion on programming in 2019, putting the company on par with other major networks and direct-to-consumer streaming services.

"The driving force behind our direct-to-consumer services -- and our entire company -- is our premium, must-have content," Mr. Ianniello said.

Later during the call, CBS Interactive President Jim Lanzone touted the growth of CBS All Access, adding that two-thirds of subscribers are opting to view a limited amount of commercials.

He also said the vast majority of subscribers to CBS All Access aren't so-called cord-cutters, viewers that have abandoned traditional pay-TV.

"We definitely don't view it as a zero-sum game," he said.

Mr. Ianniello said he expects CBS to continue to benefit from the legalization of sports betting, which has begun on a state-by-state basis since a Supreme Court decision last year that struck down a federal law banning the practice.

The company said advertising revenue rose 18%, driven by the broadcast of the Super Bowl in February on the CBS Television Network.

However, revenue in the company's cable networks business declined 3%, due in part to lower programming sales.

CBS's first-quarter revenue increased 11% from a year earlier to $4.17 billion. Analysts expected $4.3 billion, according to FactSet.

Shares fell 0.9% in after-hours trading.

New York-based CBS reported a profit of $1.58 billion, or $4.21 a share, compared with $511 million, or $1.34 a share, a year earlier. The company recorded a tax benefit in the first quarter and a $549 million gain from the sale of CBS Television City in the quarter, both of which pushed earnings higher.

CBS's profit was also propelled by growth from its local media unit, where operating profit increased 17% compared with the same period last year.

After adjustments, CBS earned $1.37 a share, a penny more than what analysts were looking for.

CBS has faced a range of personnel challenges in recent months, including a legal battle with its former top executive, Leslie Moonves, who resigned after facing numerous sexual misconduct accusations.

He has denied those charges.

Last month, the company suspended its search for a new leader and said acting Chief Executive Joseph Ianniello would continue in that role through the end of the year.

Write to Micah Maidenberg at [e-mail] and Benjamin Mullin at [e-mail]

(END) Dow Jones Newswires

May 02, 2019 19:08 ET (23:08 GMT)

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