UPDATE, 3:20 PM: CBS chief Les Moonves’ seemed a little defensive in his quarterly conference call with analysts. But his overall message still came right from Al Jolson as he tried to persuade the Street that they ain’t seen nothin’ yet. Moonves says that CBS should generate even more revenue from digital streaming services in 2012 than it did last year “We are talking to Netflix about a potential deal to do a show for them,” he said. Wouldn’t that be helping the enemy? Apparently not. “Until they are doing 22 hours a week (of prime time programming), we don’t look at them as a competitor.” CBS expects to find additional opportunities to license shows to digital services because “there’s a lot more international players getting involved.” Moonves says he’s also enthusiastic about pay TV providers’ efforts to launch TV Everywhere streaming services — especially if Nielsen can figure out how to include mobile viewers into its ratings. “I would prefer to keep the system where the commercial load is the same” in digital as it is on conventional TV, he says. Meanwhile the ad market looks encouraging to him with scatter prices up by mid-teen percentages over the upfront market. With CBS’ strong ratings, he adds, “we are commanding the bulk of the scatter market.” Moonves went a little over the top in his exuberance for the coming flood of political advertising dollars. He expects campaigns to spend about $2B on ads in 2012, and CBS typically collects as much as 10% of the spending. “We’re looking forward to a lot of nastiness on both sides,” he says — a glib line that’s becoming flat as those negative ads undermine civil discourse. On other matters, Moonves says that he has “seen no slowdown whatsoever” in contributions to CBS from Europe, despite the struggles many countries there are having with their economies and debt. The CBS chief also says that the company should collect more revenue from retransmission consent deals than he had anticipated. Although he wouldn’t say how much he expects, he says that the figure he has used for 2012 — $250M — is low. He added that the estimate does not include revenues from reverse compensation, where local stations pay the network for providing its programming.
PREVIOUS, 1:11 PM: Shares are down slightly in after hours trading. The company ended the quarter with net income of $370M, up 30.7% vs the same period last year, on revenues of $3.78B, down 3%. The revenue figure was well below the $3.91B that analysts expected. But profits, at 57 cents a share, exceeded the 53 cents that the Street forecast. The Entertainment unit — which includes CBS, its TV studio, and CBS Films — saw a 1% drop in revenues to $2B. Although this year included new digital licensing deals, the company says that last year’s figure was helped by the second-cycle syndication sale of CSI: Crime Scene Investigation and political ads. Advertising sales in Q4 were flat. Revenues at CBS’ cable networks were up 7% to $395M, due in part to rate increases for Showtime and increased licensing income for its shows. The local TV and radio broadcast stations were down 12% to $721M due to the NBA lockout and the loss of election year political ads. That should change this year CEO Les Moonves says: “It is clear, this is not going to be a very pleasant campaign,” he says adding that means it “should be very good for CBS.” He also sees the ad market strengthening, especially from auto companies. The Publishing operation, which includes Simon & Schuster, was down 1% to $229M due to a drop in sales of printed books. But cash flow was up 40% to $28M because sales of digital books are up and they are more profitable. Finally, CBS’ outdoor ad sales were up 1% to $514M. Moonves says that “as our momentum builds and our revenue mix becomes more steady and recurring, we are positioned to enhance margins, drive earnings, and return significant value to our shareholders for many years to come.”
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