Besieged CBS boss Les Moonves broke his silence today on the company’s second-quarter earnings call. However, the focus was on financials, with nary a mention of the sexual misconduct allegations made against the executive, the Board-led independent investigations of him or the legal battle with controlling shareholder National Amusements.
“In light of pending litigation and other matters, and on the advice of counsel, the scope of today’s call will be limited to the quarterly results of the company,” EVP of Corporate Finance and Investor Relations Adam Townsend said at the top of the much-anticipated call.
In scripted remarks at the top of the 50-minute session, Moonves started off with his usual enthusiastic pitch about all things CBS. “We’re as confident as ever that the strategy we have in place continues to set us up for long-term success,” he said. During the 25-minute Q&A portion, analysts stayed on topic. None ventured a question about any hot-button issues, including the status of Moonves, the impact of recent events on the tussle with National Amusements, or even M&A activity in general. In all, the call felt trapped in amber, like one that could have been held in 2015, when “me too” was a phrase referring to Republican presidential nominees.
As a company, CBS brass sought to keep the focus on financial performance. And the company did have plenty of positive news to focus on, given that it managed to slip past Wall Street estimates for the quarter and show strength across the board.
Moonves is known for breaking news on earnings calls, and this one was no different. Based on momentum at streaming services CBS All Access and Showtime’s direct-to-consumer platform, he said the company is doubling its target for total subscribers to those SVOD outlets to 16 million by 2022. The prior target was 8 million by 2020. Newer, ad-supported services like CBSN, CBS Sports HQ and the soon-to-launch CBSN Local and Entertainment Tonight app can be bundled together to form a comprehensive offering with cross-promotional benefits, Moonves noted.
While the company faces some significant headwinds in terms of linear ratings erosion, cord-shaving and other factors, it remains better than many peers when it comes to squeezing profits from traditional sources. Retransmission and licensing revenue, for example, is a mainstay for the company. Its digital efforts have also borne fruit more quickly than many analysts expected.
Moonves is facing an investigation by two outside law firms after the New Yorker magazine published a story last Friday detailing accounts by six women accusing him of sexual misconduct over three decades. As the earnings call approached, a report surfaced that the magazine’s Ronan Farrow was poised to publish a follow-up story.
Analysts, many of whom expect Moonves to exit the company, expected stronger ad sales from the flagship CBS broadcast network and the ramping up of streaming services.
CBS stock, which took an 11% hit in the first two trading days of the Moonves issue, has stabilized since, trading up a fraction today to close at $52.72.
Moonves took on topics such as sports gambling, which he said the company was focused on in light of a watershed Supreme Court ruling that is expected to pave the way to nationwide legal betting. “It will begin locally, as we’ve seen,” he said. “The NBA just signed a deal with [casino operator] MGM, which we think is extraordinarily big. And remember, when FanDuel and DraftKings were at their height, before they cooled off, they were spending a fortune in advertising. So we think it’s a category that has an unbelievable upside.”
The balancing act at CBS has had few recent precedents in the media business. At the same it has been coping with the Moonves crisis, the company remains locked in a pitched legal battle against National Amusements, its controlling shareholder and also the owner of Viacom. National Amusements chief Shari Redstone has sought to combine CBS and Viacom as they were from 2000 to 2006. CBS sued to challenge National Amusements’ controlling stake of the company via a dual-share ownership structure. Redstone has counter-sued and hearings in the clash are set to begin in October in a Delaware court.
Moonves, a onetime actor, joined CBS in 1995. He became CEO of CBS Television in 1998 and after a string of hits such as CSI, Survivor, NCIS and The Big Bang Theory then rose to CEO of CBS Corp. in 2006 after its split from Viacom.
On Sunday, CBS is scheduled to promote its upcoming fall lineup during TCA summer press tour, including the rebooted Murphy Brown and Magnum P.I.
The CBS board said late Wednesday that it has hired two high-profile law firms to probe the sexual-misconduct claims. The move capped an eventful day that saw Moonves exit the Anita Hill commission (a departure reported first by Deadline’s Dominic Patten) and also become the target of a warning shot by Times Up. The group issued a statement saying it is “watching” Moonves closely.