CBS' Q2 Earnings Soar on Ad Sales, Licensing Gains

After owning upfront, Moonves takes victory lap

Les Moonves | Photographer: Matthew Staver/Bloomberg via Getty Images


CBS Corp. on Tuesday kicked off earnings season in fine fashion, resoundingly beating Wall Street’s expectations in the wake of a powerhouse upfront bazaar and an uptick in licensing and retrans dollars.

In the second quarter of 2011, CBS generated profits of $395 million, or 58 cents a share, up 163 percent from $150 million, or 22 cents a share, in the prior-year period. Analysts had anticipated a profit of 45 cents per share.

Consolidated revenue grew 8 percent to $3.59 billion, half of which ($1.84 billion) was generated by the entertainment division, which includes CBS’ broadcast and studio arms.  

Despite tough comparisons to Q2 2010, when CBS reaped the benefit of a political ad windfall and a full share of March Madness dollars—$613.8 million, according to Kantar Media—ad sales were up 3 percent to $2.22 billion.

(Under terms of CBS’ 14-year rights deal, the broadcaster shares the NCAA hoops sales with partner Turner Sports. In April 2010, the two media outlets agreed to invest $10.8 billion in the annual tournament; CBS previously had held the exclusive rights to the tourney going back to 1982.)

Speaking to investors during an after-hours earnings call, CBS president and CEO Les Moonves crowed about the strength of the ad market and the opportunities brought by new distribution deals.

“Across every key financial metric, we turned in a stellar performance,” Moonves said. “At the heart of all this success is great content.”

Having booked more upfront cash ($2.65 billion) than any other television network on CPM increases of 14 percent, Moonves once again demonstrated that he’s all too happy to put his money where his mouth is. In March, the CBS boss warned that clients who refused to pay CBS’ asking price would be turned away from the table.

“[Ad sales president] Jo Ann Ross and her team did such a good job,” Moonves said. “We had some guys try to get high singles and she said, ‘Sorry guys, but it’s too late. You want to come in, it’s scatter time now.’”

As was the case a year ago, clients who opted out of the 2011-12 bazaar are paying as much as 35 percent more for time on CBS than those who made upfront commitments.

If [a media buyer] didn’t buy us last May, the following October they were paying 30 percent more and getting beat up by their clients,” Moonves said. “We said, ‘We want mid-teen [CPM increases], nothing lower.’ We stuck to our guns and everything worked out great for us.”

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