CBS Reports Net Loss of $252 Million for Q1 2017

Last week CBS Corporation (NYSE: CBS.A and CBS) reported its financials for the first quarter of 2017, including revenue of $3.34 billion, compared to

Subscription News: CBS Reports Net Loss of $252 Million for Q1 2017

Source: CBS

Last week CBS Corporation (NYSE: CBS.A and CBS) reported its financials for the first quarter of 2017, including revenue of $3.34 billion, compared to $3.59 billion for the same period last year. CBS attributes the difference to its first quarter 2016 broadcast of Super Bowl 50 and an additional NFL playoff game. CBS reported net earnings from continuing operations of $454 million, compared to $442 million for the same period in 2016. However, the company also reported a net loss of $252 million, or $(0.61) per common share, compared to net earnings of $473 million for the same period last year.

“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 CEO of 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,” Moonves added.

In the May 4 earnings call, Moonves said, “Going forward, all three types of our main types of revenue are set up for success for the quarters ahead.”

Other highlights of the first quarter of 2017 include:

  • Affiliate and subscription fee revenues increased 17 percent, driven by 28 percent growth in retransmission revenue and fees from CBS Television Network affiliates and the company’s digital subscription services, including CBS All Access and Showtime OTT.
  • Content licensing and distribution revenue grew 16 percent.
  • Operating income was $704 million, compared to $765 million year-over-year.
  • The net loss of $252 million, includes a noncash charge of $715 million in discontinued operations for CBS Radio.
  • Entertainment revenue for Q1 2017 was $2.35 billion, a 9 percent decrease year-over-year.
  • Cable network revenue was $543 million, a 3 percent increase year-over-year.
  • Publishing revenue (Simon & Schuster) was $161 million, an 11 percent increase year-over-year.
  • Local media revenue was $409 million, a 9 percent decrease year-over-year.
  • Corporate expenses were $79 million, a $5 million decrease year-over-year.
  • Showtime networks had 74.0 million subscribers in Q1, compared to 78.1 million for the same period in 2016.
  • CBS interactive web sites had an average of 214 million global unique monthly visitors, according to comScore Media Matrix.

During the earnings call, Moonves said that CBS All Access and Showtime OTT have been available only as separate products. Starting this week, they will be available as a bundle.

CBS’s first quarter financials did not include guidance for the coming quarter or the remainder of the year, but its first quarter investor newsletter shared some interesting statistics. According to Nielsen Total Content Ratings, which measures live TV plus 35 days of viewing in the first 13 weeks of the 2016-17 season across multiple platforms, CBS average 13.39 million viewers.

Subscription News: CBS Reports Net Loss of $252 Million for Q1 2017

Source: CBS

“The CBS Television Network is already the most watched content platform in the world, and these new metrics demonstrate that, as people’s viewing habits change, our position of strength only grows,” said David Poltrack, chief research officer, CBS Corporation and president, CBS Vision, in the investor newsletter. “This brand new data is potentially a very valuable media planning tool for our clients and their agencies. It certainly adds a new dimension to an advertiser’s program selection process, as well as more clarify about the true incremental viewing that is of enormous and increasing value in today’s changing landscape.”

Owners of CBS Corporation common stock (NYSE: CBS) did not have a significant reaction to the financials, which were released on May 4, 2017. On that day, stock value per share was $63.85. As of Wed., May 10, at 5:24 EDT, stock was valued at $62.53. Compare this to last year’s stock price of $55.80 on May 11, 2016.

Subscription News: CBS Reports Net Loss of $252 Million for Q1 2017

Source: Google Finance – Yahoo Finance – MSN Money

Insider Take:

Though the company experienced triple-digit million dollar losses in the first quarter, the company is making headway in diversifying its revenue streams and it is experiencing success as one of the forerunners of the OTT market. CBS is making deals to make its networks available via skinny bundles on Sling TV, YouTube TV and Hulu Live TV which will help the network retain its strong position in ratings and viewership. We anticipate more of these kinds of deals and partnerships which are beneficial to all involved (partnering companies, consumers, etc.)

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