) fourth-quarter 2012 earnings of 64 cents a share missed the
Zacks Consensus Estimate of 70 cents but jumped 14.3% from 56
cents earned in the year-ago quarter. Higher advertising revenue
and rise in affiliate and subscription fees were the driving
factors. Lower interest expense and share repurchase activities
also provided cushion to the bottom line.
Including one-time items, quarterly earnings came in at 60
cents a share, up 9.1% from 55 cents delivered in the prior-year
Total revenue of $3,698 million for the quarter fell short of
the Zacks Consensus Estimate of $3,946 million but increased 2.4%
from the prior-year quarter, reflecting 3.4% and 8.6% growth in
advertising revenue, and affiliate and subscription fees,
respectively, partially offset by 6.5% decline in content
licensing and distribution revenue.
We believe this Zacks Rank #2 (Buy) stock remains well
positioned to drive growth in the coming quarters through its
strategic initiatives focused on increasing subscription based
revenue channels. The company remains optimistic and expects
growth momentum to continue in 2013 based on reverse compensation
from affiliates, strong demand of its content, digital
distribution, syndication sales and retransmission consent. CBS
is eyeing around $1 billion in retransmission and reverse
compensation revenues by 2017. The company also remains positive
about CBS Television Network being the growth driver.
Streaming nowadays is becoming a significant source of revenue
generation. CBS recently entered into a deal with
) that extends the latter's archive of television shows and films
currently available on its streaming video site, Amazon Prime
Instant Video. We believe the deal is the latest effort by Amazon
to strengthen its position versus
), the leading online subscription service video in the United
In a strategic move to unlock the value of the assets, CBS
decided to convert its CBS Outdoor operations in North America
and South America into a real estate investment trust ("REIT")
and divest its Outdoor businesses in Europe and Asia. It seems
that CBS Corporation's step is in line with billboard operator,
Lamar Advertising Co.
) intention of converting into a REIT, announced last August.
We believe CBS Corporation's decision regarding Outdoor
business would augur well for the company, as it would lower its
dependency on advertising, which remains vulnerable to the
Coming to the results, adjusted operating income before
depreciation and amortization (OIBDA) increased 6.4% to $866
million, whereas adjusted OIBDA margin expanded approximately 90
basis points to 23.4%.
revenue, comprising Entertainment, Cable Networks and Publishing,
inched up 0.9% to $2,642 million.
revenue edged down 0.3% to $1,989 million from the year-ago
quarter, as increase in advertising revenue and rise in network
affiliation fees were offset by fall in television license fees.
However, segment's OIBDA jumped 3% to $328 million due to
favorable revenue mix.
Growth in subscriptions rates at Showtime Networks, CBS Sports
Network and Smithsonian Networks and licensing of Showtime
original series supplemented
revenue to mark an elevation of 10.9% to $438 million. Moreover,
increased affiliate revenues helped segment's OIBDA to increase
by 6% to $185 million, partly offset by increase in costs.
revenue declined 6.1% to $215 million, as lower sales of print
books more than offset the increased sales of digital books.
Digital book sales surged 24% during the quarter. However, high
margin digital book sales led to a 10.7% increase in the
segment's OIBDA to $31 million.
revenue, including Local Broadcasting and Outdoor, came in at
$1,127 million, up 6% from the prior-year quarter.
revenue climbed 9.2% to $787 million from the year-ago quarter on
the back of increased political advertising as well as higher
retransmission revenue. CBS Television Stations revenue jumped
17%, whereas CBS Radio revenue inched up 1% during the quarter.
The segments' OIBDA surged 22% to $325 million due to rise in
revenue. Revenue across television stations is seeing mid-single
digit growth, whereas across radio it is expected to remain flat
during the first quarter of 2013.
revenue dropped marginally by 0.6% to $340 million attributable
to fall in revenue in Canada as the Toronto transit contract was
not renewed. Revenue in the United States rose 3%, reflecting
growth across U.S. billboards and displays businesses. Outdoor
Americas' OIBDA tumbled 13% to $94 million.
Other Financial Details
CBS Corporation ended the quarter with cash and cash
equivalents of $708 million, total long-term debt of $5,922
million, and shareholders' equity of $10,213 million. The company
generated cash flow from operations of $335 million and incurred
capital expenditures of $115 million. Free cash flow of $199
million was generated during the quarter.
During the quarter, the company bought back 8.5 million shares
at an aggregate price of $299 million. Since the commencement of
the share buyback program in Jan 2011 through Dec 31, 2012, CBS
Corporation has bought back 77.7 million shares at a price of
approximately $28 per share, totaling $2.19 billion. The company
still has share repurchase authorization of $2.51 billion at its
disposal. Management also announced an additional $1 billion
share buyback plan.
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