CBS Profit Falls 24%

CBS Corp. said its second-quarter earnings fell 24% amid restructuring-related charges and weaker results at its entertainment and local broadcasting divisions.

Investors likely will be looking for any details during the company's earnings conference on the launch of Showtime's stand-alone streaming service last month, which gives consumers the opportunity to subscribe to the CBS-owned offering without first having to buy large packages of cable channels.

The move comes as CBS and its rivals pursue new areas of growth in an era when consumers have been shifting to lower-priced "skinny packages" or abandoning cable altogether.

Rival HBO, owned by Time Warner Inc., launched a similar service earlier this year. Earlier Wednesday Time Warner reported second-quarter earnings that easily topped expectations. However, the HBO division—typically a Time Warner workhorse---was the only major unit that didn't post stronger core operating earnings amid spending related to the streaming service launch.

Overall, CBS reported a profit of $332 million, or 67 cents a share, down from $439 million, or 76 cents a share, a year earlier. Excluding restructuring-related charges and other items, per-share earnings from continuing operations were 74 cents. Revenue increased 1% to $3.22 billion.

Analysts polled by Thomson Reuters expected per-share profit of 72 cents and revenue of $3.21 billion.

For the latest quarter, CBS's content and licensing revenue decreased 10% to $815 million, mostly on lower domestic television licensing revenue. Affiliate and subscription fees grew 28% to $752 million. Advertising revenue declined 3% to $1.59 billion.

In the latest quarter, CBS's entertainment division—which includes the television network, CBS Television studios and CBS films—reported revenue fell 2.7% to $1.79 billion, mostly reflecting the timing of television licensing revenue. Segment operating earnings declined 23% to $262 million amid revenue declines and increased spending for programming and digital distribution initiatives.

Local television division revenue declined 1.7% to $654 million on lower advertising revenue from the year-earlier period, which included political spending from the midterm elections. Operating earnings fell 7.9% to $198 million.

On Tuesday, Walt Disney Co.'s second-quarter earnings conference call became a forceful defense of cable sports network ESPN's future. The media giant also gave a weaker outlook for longer-term earnings growth at its cable business overall.

Viacom is set to release its second-quarter earnings on Thursday.

Write to Tess Stynes at [e-mail]

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