CBS Beats Q4 Estimates On The Back Of Distribution, Subscription Growth

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CBS
CBS

CBS Corporation (NYSE:CBS) reported better-than-expected fiscal fourth quarter results on February 15, as both its earnings per share and revenues came in ahead of market expectations. We have created an Interactive Dashboard which outlines our forecasts for the company and our expectations for its full-year 2018 results. You can modify our forecasts to see the impact any changes would have on the company’s earnings and valuation.

Key Takeaways 

In Q4, CBS’ total advertising revenue fell 3% y-o-y to $1.7 billion, primarily due to a difficult comparison to the prior year’s political spending. The company’s content licensing and distribution revenue for the fourth quarter grew 33% y-o-y with strength in both domestic and international operations. On the domestic side, the company got a lift from its distribution deals for NCIS: New Orleans, and Madam Secretary. In terms of affiliate and subscription fees, the strong 20% y-o-y increase was aided by a 31% growth in retransmission fees, and a higher revenue from the company’s over-the-top (OTT) subscription services (including CBS All Access and Showtime’s streaming service). In fact, CBS All Access and Showtime OTT together now have nearly 5 million subscribers.

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The company’s overall revenue increased 11% year-over-year (y-o-y) to $3.9 billion, primarily due to growth in all segments except Local Media. In addition, CBS reported adjusted operating income of $739 million, up 1% y-o-y. The company also posted adjusted earnings of $1.20, up 8% y-o-y.

Cable Networks Revenue Growth Continues In Q4

At the Cable Networks segment, the company’s revenue in the fourth quarter grew 9% y-o-y to $547 million. This increase was driven by growth at Showtime OTT as well as international licensing of Showtime original series. However, the segment’s operating income declined 8% y-o-y to $201 million, primarily due to the timing of its release schedule as well as higher level of investments in its programming.

Future Outlook

During the first quarter, local media revenue is expected to pace up to low single digits. CBS also expects its scatter pricing in the daytime, primetime and late night to be up nearly 40% from the upfront, demonstrating broad-based health in the marketplace. For full year 2018, CBS is guiding for revenue growth in high single digits and EPS growth in the high teens, largely on the back of growth in advertising, direct-to-consumer offerings, retransmission and reverse comps and international content licensing.

See our complete analysis for CBS Corporation 

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