Radio Unit Sale Pushes CBS to Fourth Quarter Loss

Overall revenue moves upward
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Overall revenue moves upward

Reprinted from Broadcasting & Cable.

CBS reported a fourth quarter loss because of write downs connected with the sale of its radio division.

The company had a net loss of $41 million in the fourth quarter, compared to a net loss of $113 million a year ago. The deficit includes noncash losses recognized in the split off of CBS Radio. Adjusted net earnings for the fourth quarter fell 1% to $473 million from $476 million a year ago.

Revenues were up 11% to $3.92 billion.

Content and distribution revenues rose 33%. Affiliate and subscription fee revenues were up 20%, with retrans and reverse compensation from affiliates up 31%.

Advertising revenues were down 3% due to a decline in political spending.

Operating income for CBS’s entertainment division, which includes the CBS television network, rose 25% to $465 million, despite an increase in programming costs, including programming for CBS All Access.

Entertainment revenues were up 18% to $2.82 billion. Content revenues were up 38%, affiliate and sub fees were up 40%. Advertising revenues were up 4% including the results of Network Ten in Australia.

Advertising on the CBS Television network was flat in the quarter. So far in the first quarter, ad prices across all dayparts are 40% higher than in the upfront, CBS President Joe Ianniello said.

Cable network income decreased 8% to $219 million because of increased spending on programming. Revenues increased 9%, with digital streaming Showtime generating gains. So far this year ;local media is pacing up in the low single digit range.

Local media operating income dropped 37% to $137 million. Revenues were down 14% to $450 million, with a drop in political ads offset by higher retransmission payments.

“I’m very pleased to report that CBS turned in outstanding fourth-quarter results, including double-digit revenue growth and our 32nd consecutive quarter of EPS growth, capping off a very strong year in 2017,” said CEO Les Moonves. “The CBS Corp. produces many of the most-valuable programming franchises in the world, reaching more viewers than anyone else. This gives us a tremendous advantage as streaming becomes more central to our distribution strategy. As a result, we now have nearly five million subscribers at CBS All Access and Showtime OTT combined. When you add this to our retrans and skinny bundle subscribers, our total subscriber base continues to grow at an accelerated pace.”

“We expect 2018 to be another strong year for the CBS Corp., with revenue growth in the high-single digits and EPS growth in the high teens from the record $4.40 we’re reporting to you today,” Moonves added. “So we feel very good about the growth path before us, and we continue to have great confidence in our ability to deliver for our shareholders.“

For 2018, Ianniello said that earnigs are expected to be up in the high single digit range with earning per share up in the high teens.

He said there were four revenue drivers that would each produce in excess of $100 million in incremental revenues. The four are political advertising, the direct to consumer business, higher retrans and reverse comp payment and international content licensing.

Ianniello said the growth would come even as CBS ramps up investment in organic growth initiatives.


CBS Radio Revenue Falls

In the company’s fourth quarter, “same station” revenue fell 7%, and overall radio revenue decreased 10%, reflecting weakness in ad sales as well as the impact of radio divestitures in 10 markets.