CBS Corporation 's ( CBS ) first-quarter
2013 earnings came in at 73 cents a share, surpassing the Zacks
Consensus Estimate of 68 cents and jumping 23.7% from 59 cents
earned in the year-ago quarter.
Higher advertising revenue and rise in affiliate and
subscription fees were the driving factors. Moreover, lower
interest expenses and share buybacks cushioned the bottom line.
Total revenue of $4,040 million for the quarter fell marginally
short of the Zacks Consensus Estimate of $4,053 million but
increased 6.4% from the prior-year quarter, reflecting 8% and 14%
growth in advertising revenue, and affiliate and subscription fees,
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.
Moreover, CBS continues to benefit from its streaming deals with
Netflix Inc ( NFLX ) and
Amazon. Com. Inc ( AMZN ), as evident
from the company's strong double-digit growth in streaming revenues
during the quarter.
Alongside, to boost its growth prospects in the cable television
market, the company acquired 50% stake in TVGN, TV Guide Network's
pay channel, and the website TVGuide.com from JPMorgan
Chase & Company 's ( JPM ) One Equity
Coming to the results, adjusted operating income before
depreciation and amortization (OIBDA) increased 13.5% to $916
million, whereas OIBDA margin expanded approximately 200 basis
points to 23%.
Content Group revenue, comprising
Entertainment, Cable Networks and Publishing, increased 8.2% to
Entertainment revenue rose 9.5% to $2,539 million from
the year-ago quarter, reflecting increase in advertising revenue
and rise in network affiliation fees. Strong revenue growth led to
a 17% jump in the segment's OIBDA to $480 million.
Growth in subscriptions and rates at Showtime Networks, CBS
Sports Network and Smithsonian Networks supplemented Cable
Networks revenue to mark an elevation of 5.8% to $478 million.
Moreover, growth in cable networks revenue helped the segment's
OIBDA to increase by 11% to $231 million, partly offset by a rise
in programming costs.
Publishing revenue declined 2.8% to $171 million, as
lower sales of print books more than offset the increased sales of
digital books. Digital book sales surged 14% during the quarter.
Segment's OIBDA jumped 20% to $12 million owing to a decline in
legal costs and increase in sales of high margin digital books.
Local Group revenue, including Local
Broadcasting and Outdoor, came in at $919 million, marginally above
the prior-year quarter's revenue of $910 million.
Local Broadcasting revenue increased 2.6% year over
year to $638 million benefiting from the telecast of Super Bowl
XLVII to the CBS-affiliated stations and increased
retransmission revenues. CBS Television Stations revenue increased
5%, whereas CBS Radio revenue remained flat during the quarter. The
segments' OIBDA surged 16% to $199 million due to rise in revenue
and lower programming costs.
Outdoor Americas revenue dropped 2.4% to $281 million
as the company did not renew some low-margin and unprofitable
contracts. Moreover, the segment witnessed declines in Canada and
Mexico. Outdoor Americas' OIBDA waned 3% to $74 million during the
The company stated that its local businesses including TV, radio
and outdoor, are pacing up in the low single digits for the second
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
We believe CBS Corporation's decision regarding the Outdoor
business would augur well, as it would lower its dependency on
advertising, which remains vulnerable to the economy's health.
Other Financial Details
CBS Corporation ended the quarter with cash and cash equivalents
of $409 million, long-term debt of $5,901 million, and
shareholders' equity of $9,394 million. The company generated cash
flow from operations of $587 million and incurred capital
expenditures of $34 million. Free cash flow of $576 million was
generated during the quarter.
During the quarter, the company bought back $1.3 billion worth
of shares. The company still has share repurchase authorization
worth $1.25 billion at its disposal.AMAZON.COM INC (AMZN): Free Stock Analysis
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