Amidst allegations of sexual misconduct by CBS chairman and CEO Les Moonves, CBS Corporation (NYSE: CBS.A and CBS) reported $3.47 billion in revenue, a 6 percent increase year-over-year. The company also reported net earnings from continuing operations of $400 million, or $1.05 diluted earnings per share. In an August 2 news release, Moonves said streaming video services CBS All Access and Showtime OTT are exceeding the company’s expectations.

“CBS’s strong second quarter puts us firmly on track to deliver the record full-year results we have forecast,” said Moonves. “During the quarter, each of our three revenue types enjoyed solid growth, led by affiliate and subscription fees, where we continue to see healthy gains in both traditional distribution and new digital platforms.”

“Once again, our total subscriber base – including retrans, virtual MVPDs, and our own direct-to-consumer streaming services – continues to grow, and our average rate per sub is increasing as well. In particular, our direct-to-consumer platforms, CBS All Access and Showtime OTT, are greatly exceeding our expectations,” Moonves added. “…looking ahead, we are set for continued growth in 2018, and we feel more confident than ever that CBS is uniquely positioned to succeed as a direct-to-consumer global content company.”

The company’s goal is to have 8 million subscribers combined by 2020, and Moonves said CBS is on pace to hit that goal in 2019. CBS All Access and Showtime OTT will double to 16 million domestic subscribers by 2022. At the same time, CBS is focusing on expanding its content licensing opportunities through outside distributors like Netflix, Apple and TBS.

Other financial highlights from the second quarter include:

• The majority of revenue came from the Entertainment segment at $2.37 billion.
• Affiliate and subscription fee revenues were $989 million, a 17 percent increase year-over-year. This revenue represents 28.5 percent of total revenue.
• Content licensing and distribution revenues were $1.1 billion, up 4 percent for the quarter. This revenue makes up 31.7 percent of total revenue5
• Advertising revenue was $1.33 billion, up 2 percent year-over-year. Advertising revenue represents 38.3 percent of total revenue.
• Other revenue of $54 million made up the balance of revenue, representing the remaining 1.6 percent of total revenue.
• Operating income was $659 million, a 4 percent decrease.
• Cash flow from continuing operations was $328 million, compared to $231 million in Q2 2017.
• Free cash flow was $296 million, compared to $154 million in Q2 2017.
• The company repurchased 3.8 million shares for $200 million during Q2.

Prior to the earnings report, CBS stock had dropped from $57.53 per share on July 26 to $51.28 on July 30, around the time that the sexual allegations against Moonves were disclosed.

Insider Take:

From a subscription standpoint, CBS is doing all the right things. Its streaming services have set a high bar for other niche streaming services to follow. However, the damage that Moonves’ reputation could do to the company is not yet calculable. The company’s board was apparently aware of the sexual allegations against Moonves, and they’ve since hired two female attorneys to oversee an investigation, reports the L.A. Times.

“The board noted that it takes these allegations seriously and is committed to acting in the best interest of the company and all of its shareholders,” said CBS in a statement last Wednesday.

If the company handles the matter transparently, the damage to the company’s value may only be short-term. If the company handles it badly, however, investor repercussions could be more significant.