CBS’ entertainment and local media revenues fell during the third quarter under the weight of lower content licensing and distribution revenues and slower ad revenue growth.
The entertainment segment—home to the CBS broadcast network, CBS Studios, CBS Interactive and CBS Films—posted revenues of $1.82 billion, down 7% from $1.95 billion one year ago. Affiliate and subscription fees grew 35%, thanks to higher station affiliation fees and growth at CBS All Access and third-party live television streaming offerings. But content licensing and distribution revenues fell 26% and advertising revenues decreased 3% for the quarter, partly due to one fewer Thursday Night Football game broadcast. Operating income for the segment dropped 1% to $345 million.
CBS’ local station and digital media segment reported revenues of $397 million, down 3% from $409 million one year ago. The decrease was partly due to less political advertising but was partly offset by higher retransmission revenues. The segment’s operating income of $105 million was down 14% from $122 million from one year ago.
But CBS’ cable networks segment saw a big revenue spike thanks to the Mayweather/Conor McGregor fight. The segments revenue rose a whopping 40% to $840 million, also due in part to Showtime digital streaming subscription offering. But the segment’s operating income only rose 3% to $294 million due to being “significantly offset” by higher costs associated with the pay-per-view boxing event.
“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. Our over-the-top services had a particularly strong third quarter, thanks to the exciting launch of Star Trek: Discovery on CBS All Access and the Floyd Mayweather/Conor McGregor pay-per-view event on Showtime,” said CBS President and CEO Les Moonves in a statement.
Overall, CBS’ consolidated revenue increased 3% to $3.17 billion, led by affiliate and subscription fee revenues that were up 52% and 27% higher retransmission revenues and fees from CBS Television Network-affiliated stations. The company’s operating income decreased 2% to $707 million and net earnings from continuing operations fell 10% to $418 million. Net earnings were $592 million, up from $478 million from one year ago, thanks largely to a noncash gain of $100 million associated with the CBS Radio-Entercom deal.