CBS Corp. met Wall Street analysts’s expectation for first-quarter earnings, at $1.37 per share, but fell short of revenue targets by $140 million despite reaching a company-record level for the quarter, at $4.17 billion.
Revenue rose 11% over the same quarter a year ago, powered by on stronger ad revenue, including Super Bowl LIII sales. Affiliate and subscription fee revenues rose 13%. The company attributed the gain to direct-to-consumer streaming growth, fees from CBS Television Network affiliated stations and retransmission revenue, including from virtual MVPDs. Content licensing and distribution revenues decreased 3% as a result of the benefit to 2018 from the renewal of a domestic licensing sale of Dexter.
Not counting a gain of $549 million on the sale of CBS Television City and charges relating to a restructuring plan initiated during the quarter, operating income increased 2% to $793 million. The increase was offset by a higher investment in premium content, including an increase in the number of owned series, plus higher costs associated with the growth and expansion of the DTC streaming services.
Speaking of the latter, the company said the tally of direct-to-consumer subscribers grew 71% from the same period in 2018, the highest quarterly growth rate in the company’s history, though CBS offered no specific numbers. It has reported targets and thresholds for both CBS All Access and Showtime as a combo, declining to break either service out separately. The latest guidance is for both to hit a combined 25 million subscribers by 2022.
“The emergence of a key player like Apple” is one reason the company’s leadership feels confident in hitting the 25 million mark, Ianniello said during a conference call with analysts to discuss the results. (Apple has said it will feature third-party apps like those owned by CBS, with broad reach to more than a billion devices capable of spur subscription growth.)
Acting CEO Joe Ianniello last month agreed to extend his contract through the end of 2019, with the company’s board also suspending its search for a permanent successor to Les Moonves, who departed last September. Ianniello, who has been with the company for the better part of two decades, gives CBS a familiar face to greet Madison Avenue this upfront season. The company returns to its familiar Carnegie Hall haunt on May 15.
Looming large, as it has for years, is the prospect of a reunion with Viacom, with whom CBS shares a controlling shareholder, National Amusements.