CBS Q3 operating income up 10% to $771 mn

MUMBAI: US media conglomerate CBS has posted operating income of $771 million in the third quarter of this fiscal, up 10 per cent. Revenues were $3.4 billion, up by two per cent, while OIBDA grew seven per cent to $898 million.

Revenue growth was led by an eight per cent increase in content licensing and distribution revenues, which were driven by higher domestic and international television license fees. Affiliate and subscription fee revenues rose by 12 per cent, reflecting growth at Cable Networks, higher retransmission revenues, and fees received from CBS Network affiliated television stations.

Advertising revenues were down by three per cent, primarily driven by lower advertising for CBS Radio, the impact of foreign exchange rate changes, and the impact of pre-emptions for the Republican and Democratic national conventions on six nights of the CBS Television Network?s primetime schedule.

CBS Corporation executive chairman Sumner Redstone said,"CBS has continued its remarkable run with yet another record quarter. Our world-class content and multiplatform distribution strategy remain at the center of our success."

CBS Corporation president, CEO Leslie Moonves said,"The transformation of CBS continues as reflected in these record third quarter results. We have taken a number of significant steps during the last several months to execute our strategy and grow the company. These include three major retransmission consent agreements, an important reverse compensation deal, new international and domestic streaming contracts, and the sale of our two new hit dramas, ?Vegas? and ?Elementary?, into international syndication. As we continue to take actions like these, we are increasing our recurring revenue from non-advertising sources and setting ourselves up for even more record results in the future. Going forward, we will continue to expand the ways we achieve value for our content, and we are confident we will hit our goal of a record 2012 and an even better 2013."

The growth in OIBDA and operating income was primarily driven by higher revenues and increased profits on television licensing revenues.

Free cash flow was $163 million for the third quarter of 2012, compared with $29 million for the third quarter a year ago. Free cash flow for the third quarter of 2012 included payments of approximately $60 million associated with the early extinguishment of debt, primarily for make-whole premiums. As of 30 September, 2012, the company?s debt outstanding was $5.93 billion and its cash balance was $947 million, which was $287 million higher than 31 December 2011.

Entertainment revenues of $1.68 billion for the third quarter of 2012 grew by three per cent from $1.63 billion in the same prior-year period, driven by increased domestic and international television license fees and higher retransmission revenues.

Advertising revenues were down from last year?s third quarter, primarily resulting from the broadcast of summer programming against the highly rated 2012 Summer Olympics and the impact of pre-emptions for the Republican and Democratic national conventions on six nights of the CBS Television Network?s primetime schedule.

Entertainment OIBDA for the third quarter of 2012 decreased 5 per cent to $384 million from $405 million driven by costs associated with the timing of theatrical releases and the mix of revenues.

Cable Networks (Showtime Networks, CBS Sports Network, and Smithsonian Networks) revenues for the third quarter of 2012 increased by four per cent to $436 million from $420 million for the same prior-year period driven by higher affiliate fee revenues, which reflect increases in rates and subscriptions at Showtime Networks (which includes Showtime, The Movie Channel, and Flix), CBS Sports Network, and Smithsonian Networks. Licensing revenues were down from the third quarter of 2011 reflecting the timing of digital streaming revenues. For the first nine months of 2012, streaming revenues increased significantly from the same prior-year period.

Cable Networks OIBDA for the third quarter of 2012 grew 12 per cent to $227 million from $203 million for the same prior-year period. This increase reflects the growth in affiliate revenues.