Company plans to invest $8 million in content during 2019.

Joe Ianniello, president and acting CEO, commented on the company’s results in a May 2 news release:

“CBS has once again grown across all of our key financial metrics, while continuing to invest in our future as a global multiplatform premium content company. We delivered higher profits and achieved double-digit revenue growth, helped in part by Super Bowl LIII and strong increases in affiliate and subscription fee revenues. At a time when others are losing subscribers, our total number of subs across traditional MVPDs, virtual MVPDs and our direct-to-consumer services once again grew strongly during the quarter,” Ianniello said.

Ianniello also said CBS’s direct-to-consumer subscriptions grew 71 percent over the prior year, along with strong growth in the second quarter already due to original series like The Twilight Zone on CBS All Access and Billions on Showtime. The network is producing more content, and has Amazon, Apple, Disney Plus and Netflix all buying CBS’s content. CBS plans to invest $8 billion in content this year. Between CBS All Access and Showtime OTT, CBS has 8 million subscribers.

“Given our Company's strong programming pipeline and our early-mover advantage in direct-to-consumer, we feel very confident about CBS' leadership position in a media landscape that values must-have content above all else,” added Ianniello.

Ianniello, who is serving as acting CEO, has agreed to extend his contract through year-end and the board is suspending its search for a permanent successor to Les Moonves, who left because of a sexual harassment scandal last fall.

Other highlights from the financial report include the following:

• Advertising revenue grew to $2.0 billion, an 18% increase year-over-year, due primarily to the broadcast of Super Bowl LIII.
• Affiliate and subscription fees grew $1.1 billion, a 13% increase year-over-year.
• Other revenue was comprised of content licensing and distribution and “other,” both of which saw decreases year-over-year.
• Operating income was $1.23 billion, compared to $772 million in Q1 2018.
• Operating cash flow was $438 million, down from $717 million during Q1 2018.
• CBS realized a $549 million gain on the sale of CBS Television City and charges related to a corporate restructuring which began in the first quarter.
• Net earnings for the first quarter were $1.58 billion, compared to $511 million for Q1 2018.
• Adjusted net earnings increased to $515 million, a 1% increase year-over-year.
• Adjusted diluted earnings per share were $1.37, a 2% increase you and a first-quarter company record.

Breaking CBS revenue down into business segments – Entertainment, Cable Networks, Publishing, Local Media and Corporate – entertainment comprised the most revenue at $3.18 billion, a 15% increase yoy. Advertising revenue in this category grew 19%, primarily to do Super Bowl advertising. Another big win for CBS was a 26% increase in subscriber growth for CBS All Access and increases in station affiliation fees and revenues from MVPDs. Content licensing and distribution revenues were up 3%, primarily due to higher sales of series produced for third-party services.

According to Deadline, CBS met analyst projections for earnings, but was short of their revenue target by $140 million. Despite the record revenue and adjusted diluted earnings per share, investors were not overly impressed. On Monday, April 29, CBS stock was at $51.75 per share. Since then it has dropped to $49.73 per share as of 7:43 p.m. EDT on May 3.

Insider Take:

CBS is killing it in the direct-to-consumer world, about a third of its way to its goal for 2022 of 25 million domestic subscribers. Original series like Star Trek: Discovery, Twilight Zone and The Good Fight make the company more valuable, as do the 80 series CBS produces across 15 broadcast cable and streaming outlets which is double the number of series and triple the number of outlets from five years ago. With distribution platforms like Roku, Amazon, Netflix, Disney Plus and Hulu and Ianniello sticking around, CBS could continue to post record financials in 2019.

Dana Neuts is Subscription Insider's Senior Staff Writer, covering our daily subscription news as well as member features, case studies, and reports.  

Read Full Bio