CBS’s second-quarter earnings were marked by an overall 9% increase in revenues to $3.26 billion, a boost the broadcaster credited in part to subscription and affiliate fees rising 16%.
The subscription increase was driven in part by a 25% increase in retransmission revenues and fees from CBS Television Network affiliated stations. In all, CBS’s Local Media revenues rose 4% to $412 million despite advertising revenues for the second quarter falling 2%. Operating income for the segment fell 2% from $130 million to $127 million for the second quarter of 2017.
Overall, CBS Corps.’ operating income rose 3% to $669 million.
"First, we had a terrific upfront with gains in pricing and volume, including more and more deals that better reflect how people are watching our programming on a delayed basis. In addition, we took significant steps during the quarter to grow our affiliate fees from both traditional and 'skinny' bundles. Retransmission consent and reverse compensation increased 25% in the second quarter. And we are now seeing the benefit of our recent skinny bundle deals with Google's YouTube TV, Hulu, fuboTV, and just today we announced that we will be a part of DIRECTV NOW as well. At the same time, our in-house over-the-top subscription services, CBS All Access and Showtime OTT, continue to grow beyond our expectations and are on track to surpass a combined four million subscribers by the end of 2017,” said CBS CEO Les Moonves in a statement (PDF). “We are now gearing up to take the next strategic step with All Access by expanding it into the international marketplace, starting with Canada in the first half of 2018. Showtime also had a terrific quarter, led by the successful return of 'Twin Peaks,' which boosted OTT subscriptions dramatically, and we continue to expand the Showtime brand overseas with new deals to license our entire portfolio in France, India, Taiwan, Hong Kong, and others.”
CBS’s entertainment revenues grew 12% to $2.18 billion, sparked by 38% growth in affiliate and subscription fees, thanks to higher station affiliation fees and subscriber growth at CBS All Access. Advertising revenues rose 6% and content licensing and distribution revenues grew 12%. The segment’s operating income fell 1% to $346 million because of tougher comps with higher-margin revenues in the second quarter of 2016.
CBS’s cable networks revenues rose 7% to $571, again thanks in part to higher affiliate and subscription fees at the Showtime digital streaming subscription service. Operating income for the segment rose 11% to $253 million.