CBS Earnings Up on Cost Cuts
NEW YORK (
) --
CBS
(CBS) - Get Report
saw its third-quarter earnings rise more than 50% due to a significant cut in total expenses.
For the quarter ended September 30, the company saw earnings rise 52.8% to $317.3 billion, or 46 cents per diluted share, compared with earnings of $207.6 million, or 30 cents per diluted share, in the same period a year ago. Earnings were well ahead of analyst estimates of 31 cents a share.
The company cut its total costs by 8.4% to $2.67 billion from $2.93 billion. Its operating costs were down 10.1%, while its operating income increased 46.2% to $611.2 million from $418.2 million.
The lower expense costs more than offset the 1.6% drop in total revenue to $3.3 billion from $3.35 billion during the quarter, which was attributed to the absence of five major titles in its entertainment segment.
Revenue from the company's entertainment segment was down 12% to $1.62 billion from $1.83 billion attributed to the comparison to the strong third quarter in 2009 which benefitted from
Medium
,
Criminal Minds
,
Ghost Whisperer
,
Everybody Hates Chris
and
Numb3rs
. Network advertising revenue increased 7% and CBS interactive display advertising revenue rose 17%.
Local broadcasting revenue was up 15% to $677.3 million from $589.8 million driven by growth in advertising sales. The improved advertising marketplace was reflected in the 25% gain in advertising revenues at CBS television stations as well as the 9% increase at CBS radio stations.
Revenue from its cable networks was up 12% to $370 million from $331.1 million due to rate increases and growth in subscriptions at Showtime and CBS college sports networks.
"CBS's strong momentum continues to grow across our businesses," Moonves said. "Just as we saw last year, each quarter in 2010 is delivering higher profits than the quarter before. The operating environment continues to improve, and we are reaping the benefits of our lower cost structure, with margins that are approaching pre-recession levels. Plus, our content continues to flourish."
Its Showtime division, which includes Showtime, The Movie Channel and Flix, saw subscriptions rise 7% to 64.9 million driven by more direct broadcast satellite and telephone subscriptions, while subscriptions at its college sports networks 16%.
Revenue from its Simon & Schuster publishing division decreased 5.5% to $217.7 million from $230.4 million.
For the first nine months of the year, earnings rose 1.6% to $441.2 million, or 64 cents a share, compared with earnings of $167.7 million, or 25 cents a share, in the same period a year ago.
Revenue rose 6.8% to $10.16 billion from $9.52 billion, led by 17% increase in revenue at its local broadcasting segment.
Its entertainment segment revenue was up 4% while its cable networks saw revenue gain 11%. Total advertising sales grew 12%, attributed to the 2010 telecast of Super Bowl XLIV on CBS as well as increased political advertising.
"As we close out the year, we believe that the fourth quarter will continue the trend of improving upon the quarter before it," Moonves said "And with the substantial free cash flow we consistently produce, we'll keep investing in our businesses and returning value to shareholders while maintaining our discipline on expenses. We see a strong finish to 2010 and a very bright future ahead."
Today the company declared a $1.5 billion share repurchase program in which it intends to buy back CBS class B common stock, beginning in January 2011.
"This new share buyback program reflects the confidence we have in the long-term strength and viability of our business, which continues to generate strong, healthy free cash flow," Moonves said. "We have a long-standing commitment to returning value to our shareholders and this initiative speaks to that."
--Written by Theresa McCabe in Boston.
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