CBS Reports Higher Earnings With Radio Division Gain

Ad revenue down 3% at network

CBS reported higher earnings as it reported a gain in the value of the radio division it is spinning off.

Net earnings were $592 million, or $1.46 per share, compared to $478 million, or $1.07 per share a year ago. Net earnings for 3Q 2017 included a non-cash gain of $100 million to increase the value of the CBS radio stations, based on the terms of the deal selling them to Entercom.

Revenues rose 3% to $3.17 billion. Advertising revenue dipped to $1.106 billion from $1.162 billion a year ago. Affiliate and subscription fees jumped 52%  to $1.145 billion from $753 million, powered by Showtime’s distribution fo the Floyd Mayweather-Conor McGregor pay-per-view fight.

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CBS’s entertainment group, which includes the CBS Broadcast Network reported operating income of $345 million, down 1% from $348 million a year ago. Revenue slid 7% to $1.815 billion from $1.948 billion a year ago.

Affiliate and subscription fees were up 35% from higher station affiliation fees and growth from CBS All Access and other streaming activities.

Ad revenue was down 3% partly because of broadcasting fewer Thursday Night Football game.

Cable network operating income rose 3% to $294 million. Revenues rose 40% to $840 million because of the Mayweather-McGregor fight, but the fight resulted in higher costs as well.

“Our solid third-quarter results demonstrate the way we are shifting our business to capitalize on changing viewing habits,” said CEO Les Moonves. “To that point, during the quarter we saw dramatic growth in our affiliate and subscription fees, including revenue from traditional and skinny bundles as well as over-the-top viewing. Today we have more subscribers at CBS and at Showtime than we did a year ago, and best of all, newer digital platforms are resulting in more revenue per subscriber than traditional ones. So not only are we growing our subs, but we are growing our rates as well.”