CBS All Access, Showtime Anytime make 'meaningful contribution' to $3.85B record Q1 revenues

CBS is paying close attention to the growth of its two OTT properties, CBS All Access and Showtime Anytime, which "are beginning to make a meaningful contribution to our revenue and our profit," Les Moonves, chairman, president and CEO, told investors on the its first-quarter earnings call, as the network reported record-breaking revenues of $3.85 billion.

CBS attributed the 10 percent year-over-year jump to its Super Bowl ad sales success along with a rise in incremental revenue and strong network advertising sales. Other factors like retransmission fees and reverse compensation contributed to the corporation's revenues, too.

EPS climbed 32 percent to $1.02, the first time that per-share earnings crossed the dollar mark in the company's history.

The financial picture wasn't completely rosy -- lower licensing revenues offset retrans and ad growth in the quarter -- but market analysts responded positively to the results. Jefferies reiterated CBS' stock as a "buy" with a higher target price of $62, while MoffettNathanson maintained its "neutral" rating but raised its target price by a dollar to $57.

"Although the advertising market strength is set to continue, we still worry about the sustainability of CBS's syndication revenues, which remains a core driver of company profits," MoffettNathanson analysts said in an investor note.

"CBS appears well positioned to capitalize on OTT offerings," said Jefferies analysts in a note to investors. "A potentially deepening relationship with Hulu may help accelerate revenue growth, while also slow the growth of competitive offerings, in our view." The analyst firm is predicting Showtime Anytime subscribers will reach 750,000 to 1 million "when Ray Donovan premieres in early July."

CBS is going into advertising upfronts in a strong position. "Last year, those who bought their ad time early did extremely well," said Moonves, according to a Seeking Alpha transcript. "Since then, scatter pricing has grown dramatically and it's clear that clients are not going to want to miss out on the opportunity to buy their time early this year. Needless to say, we feel very good about the hand we'll be playing, when negotiations begin in the coming weeks."

The network also extended its partnership with Turner Networks on their licensing deal with the NCAA to broadcast and stream the March Madness basketball tournament through 2032.

Moonves also called out several OTT highlights during the first quarter:

  • James Corden's late night show has passed 1 billion views on YouTube and has two of the most-watched clips online ever.
  • CBS News' digital version saw more than 50 million streams in the first quarter and received a Webby Award for best news and info channel.
  • Star Trek's first original series in 11 years will debut in January, simultaneously on CBS All Access and on broadcast, with subsequent episodes available exclusively online.
  • CBS All Access will add three to four original series per year.
  • Showtime Anytime was licensed internationally through Sky Europe and Stan in Australia, and with more such deals in the works, is building its recurring revenue base.

For more:
- see the earnings release
- see the Seeking Alpha transcript
- see this WSJ article

Related articles:
Finding OTT's tipping point: three factors could push it past pay-TV subscriber totals
CBS expects $2.5B from retrans, $800M from SVOD distribution by 2020
Moonves: 'You cannot live without CBS,' whether streamed or broadcast

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