It's no Netflix Inc. (NFLX - Get Report) , but CBS Corp. (CBS - Get Report) on Monday, Aug. 3, said its digital subscription platforms will amass more than 4 million total subscribers in 2017. And COO Joseph Ianniello declared its 8 million subscriber goal by 2020 "conservative" on an investor conference call Monday.
For CBS, which gets most of its revenue from its network and TV studio, that's found money. Though Netflix remains the global leader in digital video subscribers at more than 100 million, CBS has been able to build businesses that can provide some stability as advertising sales fluctuate and cable TV operators lose subscribers, CBS CEO Leslie Moonves said on an investor conference call on Monday.
By year's end, CBS said it will launch a digital standalone sports subscription service to go along with CBS All Access, the online facsimile of its top-ranked network launched in October 2014 and its digital version of Showtime, which began in July 2015.
Subscriptions to both services are expected to rise once "Star Trek: Discovery" debuts on CBS All Access on Sept. 24 and the fight between Floyd Mayweather and mixed martial arts champion Conor McGregor tales place Aug. 26 on Showtime PPV. Additionally, Moonves said CBS All Access will launch in Canada early next year with other international markets to follow.
Shares of CBS were gaining 0.7% in after-market trading on Monday at $64.95; the stock has jumped 24% over the past 12 months.
Second-quarter sales of $3.26 billion at CBS topped the $3.09 billion average of analysts' expectations as CBS capitalized on stronger-than-expected advertising sales from its broadcast of the NCAA men's basketball tournament. Ad sales jumped 4.3% during the quarter, a positive surprise considering that Time Warner Inc. (TWX) and Scripps Networks Interactive Inc. (SNI) both posted sluggish advertising results last week.
"We've proven that broadcast is better than cable," Moonves said."
Revenue for the quarter grew 9% over the same period a year ago, as CBS secured a 16% increase in fees it receives from pay-TV operators and local CBS affiliates, which pay to carry programming including "The Big Bang Theory" and "The Late Show with Stephen Colbert."
Operating income for the quarter increased 3% to $669 million from $651 million for the same period a year ago.
CBS also is seeing a "meaningful contribution to results" from its inclusion in digital pay-TV bundles such as Alphabet Inc.'s (GOOGL - Get Report) YouTube TV, Hulu and sports aggregation platform fuboTV, Ianniello said. CBS on Monday also said it had reached a deal with AT&T Inc. (T - Get Report) to include its networks on DirecTV Now, the telecom's digital pay-TV service. CBS was the last major broadcaster to agree to become part of the standalone streaming service.
"Skinny bundles are becoming a bigger part of our results as these services launch and expand," he added.
As for buying CNN if AT&T closes its acquisition of Time Warner and decides to sell the network, Ianniello said CBS isn't looking to purchase the 24-hour news network.
"We don't need M&A to achieve our objectives," he said.
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