CBS Corporation (NYSE: CBS.A and CBS) posted positive second quarter 2016 results last week, including higher-than-anticipated earnings per share and premium subscription growth bringing total subscribers to 2 million for CBS All Access and Showtime. Other highlights from the second quarter of 2016 include:

• Revenue for Q2 increased 2 percent to $3.29 billion, compared to $3.22 billion year-over-year
• Operating income increased 25 percent to $733 million from $586 million year-over-year
• Net earnings grew 27 percent to $423 million from $332 million year-over-year
• Earnings per share grew 39 percent to $0.93, compared to $0.67 year-over-year and exceeding analysts’ estimates of $0.86 per share.
• Affiliate and subscription fees increased 59 percent, reflecting higher station affiliation fees, retransmission revenues and subscription growth for CBS All Access
• Advertising revenue for the Entertainment division declined 3 percent.
• Cable Network revenue was $536 million, down 13 percent year-over-year. During the same period last year, the Floyd Mayweather/Manny Pacquiao boxing event aired. It was the highest grossing pay-per-view event of all time, impacting year-over-year revenue.
• Five percent growth in affiliate and subscription fees for Cable Networks, driven by Showtime’s over-the-top streaming service.

Leslie Moonves, chairman and CEO of CBS Corporation, is pleased with the results.

“CBS turned in another terrific quarter, on the way to another outstanding year, as we continue to take advantage of all the growth catalysts before us,” Moonves said in a press release.

“Our over-the-top streaming services, CBS All Access and Showtime OTT, continue to exceed expectations, and we anticipate a significant lift next year with the launch of our new Star Trek series on CBS and Twin Peaks on Showtime,” he added. “Looking ahead, we will continue to invest first and foremost in premium content while using excess cash to return capital to our investors.”

On the subscription side, CBS announced that its premium offerings now have a total of 2 million subscribers, or 25 percent of the company’s goal of 8 million subscribers by 2020, reports Bloomberg. In addition to the airing of Star Trek in the U.S. exclusively on CBS All Access, CBS has made a deal to show the new Star Trek series to international viewers on Netflix. According to Bloomberg, CBS also made a deal to produce a spinoff of Carpool Karaoke for Apple Music.

Insider Take:

As one of the early entrants to the OTT market, CBS seems to have it figured out, first with CBS All Access and then with Showtime. CBS understands that the cable TV market is changing, and cord cutters and cord nevers want options. CBS has capitalized on that by offering affordable alternatives as well as exclusive programming not available from other OTT services.

CBS has also set a realistic goal of 8 million subscribers over the course of the next four year. This gives the company plenty of time for its programming to evolve and to test new technologies, marketing opportunities and content. Other OTT can learn from CBS’s success.