CBS Corporation Reports First Quarter 2017 Results

NEW YORK, May 4, 2017 /PRNewswire/ -- CBS Corporation (NYSE: CBS.A and CBS) today reported results for the first quarter of 2017, including record first-quarter adjusted diluted earnings per share ("EPS") from continuing operations.

"Our first-quarter results once again demonstrate the strength of our strategy, which is to diversify our revenue mix as we achieve our long-term financial goals," said Leslie Moonves, Chairman and Chief Executive Officer, CBS Corporation. "Retransmission consent and reverse compensation led the way in Q1, growing 28%. This contributed to a 17% increase in our Company's affiliate and subscription fee revenue, which also benefited from our over-the-top subscription services, CBS All Access and Showtime OTT. In addition, we a had very solid quarter for content licensing and distribution, which was up 16% and is poised for continued strength when several of our hit series enter the syndication cycle later this year. And we continue to add to our content pipeline all the time. In two weeks we will unveil our new primetime schedule on the CBS Television Network, which will include 19 returning series further strengthened by several new shows, the majority of which we will own. We look forward to the upfront marketplace where we're confident advertisers will once again place great value on the #1 television network in an increasingly fragmented media landscape. And longer term, that content becomes even more valuable when we license it across distribution services, both here in the U.S. and internationally as well. As we continue to sharpen our core content focus in the quarters to come, including the impending split-off of our radio business, we will be even better positioned to take advantage of all of the opportunities before us. So there is so much yet to come, and our road map for success is clear."

First Quarter 2017 Results

Revenues were $3.34 billion for the first quarter of 2017, down from $3.59 billion for the first quarter of 2016, when the CBS Television Network broadcast Super Bowl 50 and an additional National Football League ("NFL") playoff game. Excluding these two noncomparable games, first quarter revenues would have been up high-single digits. In addition, affiliate and subscription fee revenues increased 17%, driven by 28% growth in retransmission revenues and fees from CBS Television Network affiliated stations, as well as the Company's digital subscription services. Content licensing and distribution revenues grew 16%, led by higher domestic and international television licensing sales.

Operating income for the first quarter of 2017 was $704 million compared with $765 million for the same prior-year period, as a result of the above-mentioned noncomparable NFL games.

Net earnings from continuing operations were $454 million for the first quarter of 2017 compared with $442 million for the same quarter last year. Net earnings from continuing operations for the first quarter of 2017 included tax benefits from the resolution of certain state income tax matters as well as the exercise of stock options and vesting of RSUs. The Company reported a net loss of $252 million for the first quarter of 2017 compared with net earnings of $473 million for the same prior-year period. The net loss for the first quarter of 2017 included a noncash charge of $715 million in discontinued operations to establish a valuation allowance to adjust the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom Communications Corp. CBS Radio is classified as held for sale and therefore, in accordance with accounting guidance, the valuation allowance will continue to be adjusted based on the trading price of Entercom's stock, which could result in future gains or losses.

Diluted EPS from continuing operations for the first quarter of 2017 was $1.09 compared with $.95 for the same quarter in 2016. Adjusted EPS from continuing operations increased 9% to $1.04, as a result of lower shares outstanding in the first quarter of 2017 because of the Company's ongoing share repurchase program. Adjusted EPS from continuing operations excludes the tax benefit of $22 million, or $.05 per diluted share, from the resolution of the aforementioned state income tax matters. EPS for the first quarter of 2017 was a loss of $.61 as a result of the above-mentioned noncash charge at CBS Radio, compared with EPS of $1.02 for the prior-year period. During the quarter, the Company repurchased 7.6 million of its shares for $500 million.

Details of the discrete items excluded from financial results, along with reconciliations of adjusted results to their most directly comparable GAAP financial measures, are included at the end of this earnings release.

Free Cash Flow

For the first quarter of 2017, operating cash flow from continuing operations was $678 million, which included discretionary pension contributions of $100 million to prefund the Company's qualified plans, compared with operating cash flow from continuing operations of $923 million for the first quarter of 2016, which included CBS's broadcast of Super Bowl 50. Meanwhile, operating cash flow from continuing operations benefited from higher affiliate and subscription fee revenues in the first quarter of 2017. Free cash flow was $651 million for the first quarter of 2017 compared with $889 million for the same prior-year period.

Consolidated and Segment Results (dollars in millions)

The tables below present the Company's revenues by segment and type; operating income (loss) excluding other operating items, net, by segment ("Segment Operating Income"); and depreciation and amortization by segment for the three months ended March 31, 2017, and 2016.

Entertainment (CBS Television Network, CBS Television Studios, CBS Studios International, CBS Television Distribution, CBS Interactive, and CBS Films)

Entertainment revenues of $2.35 billion for the first quarter of 2017 decreased 9% from $2.59 billion for the first quarter of 2016. Comparability of revenues was affected by the 2016 broadcast of Super Bowl 50 and an additional NFL playoff game on the CBS Television Network. Affiliate and subscription fees grew 28%, driven by higher station affiliation fees and subscriber growth at CBS All Access. Content licensing and distribution revenues were up 21%, reflecting growth in domestic and international licensing sales.

Entertainment operating income of $398 million for the first quarter of 2017 decreased 11% from $449 million for the same prior-year period, driven by the impact of the above-mentioned noncomparable NFL games, which was partially offset by higher station affiliation fees.

Cable Networks (Showtime Networks, CBS Sports Network, and Smithsonian Networks)

Cable Networks revenues of $543 million for the first quarter of 2017 increased 3% from $525 million for the same prior-year period. The increase was driven by higher affiliate and subscription fees, led by growth of the Showtime digital streaming subscription offering, which was partially offset by the timing of international television licensing sales of Showtime original series.

Cable Networks operating income of $248 million for the first quarter of 2017 increased 9% from $228 million for the same prior-year period, primarily reflecting growth in higher-margin revenues.

Publishing (Simon & Schuster)

Publishing revenues of $161 million for the first quarter of 2017 increased 11% from $145 million for the same prior-year period. The increase was led by growth in print book sales and digital audio sales. Bestselling titles for the first quarter of 2017 included Unshakeable by Tony Robbins and A Man called Ove by Fredrik Backman.

Publishing operating income of $14 million for the first quarter of 2017 grew 8% from $13 million for the same prior-year period, as the increase in revenues was offset by higher production and selling costs.

Local Media (CBS Television Stations and CBS Local Digital Media)

Local Media revenues of $409 million for the first quarter of 2017 decreased 9% from $448 million for the first quarter of 2016, which included CBS's 2016 broadcast of Super Bowl 50 and an additional NFL playoff game. The impact of these items was partially offset by growth in retransmission revenues.

Local Media operating income of $123 million for the first quarter of 2017 decreased 18% from $150 million for the same prior-year period, primarily reflecting the decline in revenues. 

Corporate

Corporate expenses for the first quarter of 2017 decreased $5 million to $79 million from $84 million for the same prior-year period, mainly due to lower employee compensation costs, partly as a result of changes in the Company's stock price.

About CBS Corporation
CBS Corporation (NYSE: CBS.A and CBS) is a mass media company that creates and distributes industry-leading content across a variety of platforms to audiences around the world. The Company has businesses with origins that date back to the dawn of the broadcasting age as well as new ventures that operate on the leading edge of media. CBS owns the most-watched television network in the U.S. and one of the world's largest libraries of entertainment content, making its brand -"the Eye" - one of the most recognized in business. The Company's operations span virtually every field of media and entertainment, including cable, publishing, radio, local TV, film, and interactive and socially responsible media. CBS's businesses include CBS Television Network, The CW (a joint venture between CBS Corporation and Warner Bros. Entertainment), CBS Television Studios, CBS Studios International, CBS Television Distribution, CBS Consumer Products, CBS Home Entertainment, CBS Interactive, CBS Films, Showtime Networks, CBS Sports Network, Pop (a joint venture between CBS Corporation and Lionsgate), Smithsonian Networks, Simon & Schuster, CBS Television Stations, CBS Radio and CBS EcoMedia. For more information, go to www.cbscorporation.com.

Cautionary Statement Concerning Forward-Looking Statements
This news release contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. These forward-looking statements are not based on historical facts, but rather reflect the Company's current expectations concerning future results and events. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause the actual results, performance or achievements of the Company to be different from any future results, performance or achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among others: advertising market conditions generally; changes in the public acceptance of the Company's content; changes in technology and its effect on competition in the Company's markets; changes in the federal communications laws and regulations; the impact of piracy on the Company's products; the impact of the consolidation in the market for the Company's content; the impact of negotiations or the loss of affiliation agreements or retransmission agreements; the impact of union activity, including possible strikes or work stoppages or the Company's inability to negotiate favorable terms for contract renewals; the ability to achieve the separation of the Company's radio business through a merger of CBS Radio with a subsidiary of Entercom Communications Corp. on the anticipated terms, which are subject to regulatory and Entercom stockholder approvals, an exchange offer and other customary closing conditions, and fluctuations in the market values of Entercom's Class A common stock and the Company's Class B common stock; other domestic and global economic, business, competitive and/or other regulatory factors affecting the Company's businesses generally; and other factors described in the Company's filings with the Securities and Exchange Commission including, but not limited to, the Company's most recent Form 10-K, Form 10-Q and Form 8-Ks. The forward-looking statements included in this document are made only as of the date of this document, and under section 27A of the Securities Act and section 21E of the Exchange Act, we do not have any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

SOURCE CBS Corporation

Related Links

http://www.cbscorporation.com