Updated 6:35 p.m. ET
CBS Corp. rode solid advertising sales growth to higher fourth quarter
profits and said that the good financial results should continue to come
for some time into the future.
With CBS' broadcast schedule humming, said CEO Les Moonves, speaking
Wednesday during the company's earnings call with analysts, said that
investments in development and marketing should be lower.
"Next season we could almost play a pat hand. There's little change
necessary in our schedule," he said. "It's a tough problem here at CBS.
You better be really good to make it on our schedule.
New shows have a better chance of success on CBS because get strong
lead ins, Moonves said. This season, Blue Bloods, Hawaii Five-0 and Mike
& Molly have all launched successfully, thanks in part to following
The strength of the CBS schedule also means that the network doesn't
have to keep older, more expensive shows on the air, Moonves added.
Last year, for example, CBS cancelled Without A Trace, a show that cost
$4 million an episode and replaced it with The Good Wife, which costs
less than half that, and ratings have been just as good.
"We don't let shows age and just hang around because that's all we've got," he said.
Many of CBS' new shows are profitable before the air in the U.S. because
of international distribution deals. The shows are also in demand by
new digital distributors. Moonves said that CBS' priority is to protest
its advertising and syndication revenue.
"All these platforms want our content," he said. "They are offering us phenomenal deals and we will make some of those deals."
Ad revenues for the CBS broadcast network were up 8%, with gains coming from primetime and sports.
Moonves said the network has not had to provide advertisers with any
make-good spots for ratings shortfalls, and that in the fourth quarter,
prices for commercials in the scatter market were up 35% compared to
prices charged in the upfront market. . So far in the first quarter,
scatter prices are up 40%.
"That give you a pretty good idea where pricing is heading going into the upfront," he said.
In the first quarter, CBS's ad revenues will face a difficult comparison
because in 2010, the network had the Super Bowl, which generates
hundreds of millions in revenues. Last year, CBS also had the entire
NCAA Men's Basketball Tournament to itself. This year, Turner
Broadcasting will also be televising games and CBS will realize revenue
only for the games on its broadcast network. But while revenues are
down, Moonves said profits will be up because under the old deal with
the NCAA, CBS lost a considerable amount of money. The new deal
including Turner "will make money right away. . . for us, it's a major
Moonves said commercials during the tournament were already "virtually sold out."
In addition to advertising, CBS is growing other revenue streams.
Moonves said retransmission revenue exceeded it target of $100 million
this year and was expected to top $250 million by the end of 2012.
That figure does not include reverse compensation from affiliates.
"That's another number starting to kick in that will be significant by
2012 he said.
CBS said net earnings were $283 million, or 41 cents a share, up from $58.8 million, or cents, a year ago, the company.
Adjusted net earnings of $319.4 million for the fourth quarter of 2010
increased 78% from $179.2 million for the same quarter last year, and
adjusted diluted earnings per share of $.46 increased 77% from $.26,
exceeding Wall Street forecasts. Revenues rose 11% to $3.9 billion.
Total ad sales were up 12%.
"CBS's momentum accelerated throughout 2010, culminating in our best
results of the year in the fourth quarter," Moonves, said in a
statement. "On the television network, in domestic and international
syndication, on cable and on new and emerging platforms, our content
continues to outperform, and we're increasingly being paid a premium for
it as a result. The ongoing resurgence of our local businesses also had
a very positive effect on the quarter."
Adjusted earnings for CBS' Entertainment segment, which includes the CBS
Television Network, its TV studios, syndication, film and interactive
arms rose 31% to $249 million from $190.8 million, as revenues rose to
11% $2.02 billion from $1.8 billion. Local broadcast's adjusted
earnings rose 43% $321.8 million from $225.1 million Local broadcasting
revenues were up 21% to $821 million. Television station advertising was
up 28%. Adjusted earnings at CBS' cable networks, including Showtime
Networks, CBS College Sports and Smithsonian Network, rose 10% to $168.6
million Revenue was up 6% to $368.3 million.
Mooves said the Showtime now has just under 20 million subscribers.
"We've closed the gap considerably with our top competitor," he said.