) first quarter 2014 earnings of 78 cents grew 7% year over year
and was ahead of the Zacks Consensus Estimate of 75 cents. Higher
operating income and aggressive share buyback activity led to the
bottom line growth.
However, the shift of Super Bowl broadcast this year to
Twenty-First Century Fox, Inc.
) had a telling effect on the CBS Corp's revenues leading to a 2.3%
drop in share price in the after-market trading hours. Total
revenue of $3,856.0 million fell short of the Zacks Consensus
Estimate of $3,947 million and declined 4.6% from the prior-year
quarter. Super Bowl had alone contributed more than $280 million to
revenues in the prior year quarter.
The 6% rise in content licensing and distribution revenues to
$1,073 million and 9% increase in affiliate and subscription fees
to $567 million were not enough to offset the lower advertising
Operating income before depreciation and amortization (OIBDA)
increased 2% to $930 million and operating income grew 2% to $818
million. The rise in both the key financial metrics was driven by
robust growth of high margin revenue.
CBS Corp. continues to benefit from content monetization and rise
in non-advertising revenue. Moreover, the company has received the
IRS ruling for the conversion of its subsidiary
CBS Outdoor Americas Inc.
) into a real estate investment trust (REIT). This will be
significant as CBS Corp is looking to emerge as a pure content
company. Moreover, with political advertising increasing in the
second half of 2014, more syndication deals ahead and spike in
retransmission and affiliate revenues, CBS Corp is set to deliver
another solid financial performance in 2014.
revenues fell 6% to $2,993 million as growth at
was run down by dismal performance at
revenues fell 9% to $2,303 million from the year-ago quarter,
driven by Super Bowl broadcast in the prior-year period and fewer
NCAA Division I Men's Basketball Championship matches in the
quarter under review. The segment's OIBDA fell 5% to $457 million
as strong growth of licensing of television programming was offset
by lower advertising revenue.
Continuous growth in licensing revenues and affiliate revenues
' revenues to mark an increase of 12% to $537 million. Moreover,
growth in cable networks revenues helped the segment's OIBDA to
increase 12% to $259 million, partly offset by a rise in
revenues declined 11% to $153 million but the segment's OIBDA
increased 8% to $13 million.
, came in at $914 million, down 0.5% from the prior-year quarter
revenues decreased 2% to $626 million. CBS Television Stations
revenues fell 5% and CBS Radio's revenues grew 2%. The segments'
OIBDA increased 1% to $200 million due to lower programming costs.
revenues rose nearly 2% to $288 million whereas OIBDA decreased 7%
to $69 million in the quarter.
Other Financial Details
CBS Corp. ended the quarter with cash and cash equivalents of $311
million, other long-term debt of $5,850 million, and shareholder
equity of $8,467 million. The company generated net cash flow from
operations of $501 million and incurred capital expenditures of $36
million. Free cash flow of $485 million was generated during the
In the quarter, CBS Corp. repurchased 31.4 million shares for $2
billion. The company has $3.43 billion worth of shares left to be
repurchased as of Mar 31, 2014. For 2014, the company expects to
return about $6 billion to shareholders, reflecting the company's
priority to maximize shareholder return.
Needless to say, the company is firing on all cylinders and it is
expected that this growth momentum will continue in 2014 and
beyond. CBS Corp.which competes with
The Walt Disney Company
) is focused on lowering its dependency on conventional
advertising, which is commendable since it is highly susceptible to
Given the increasing reverse compensation from affiliates, strong
demand of its content, digital distribution, syndication sales and
retransmission consent, CBS Corp. is poised to benefit from
diversification of revenue streams.
CBS Corp.continues to expect retransmission fees to hit the $2
billion mark in 2020. Currently, it expects retransmission fees to
reach $1 billion by 2017.
Additionally, the company expects CBS Television Network to be a
major growth driver as the network owns most shows in the top 10
and top 20 countdowns. Notably, its shows such as NCIS and The Big
Bang Theory are worth mentioning in this respect.
Currently, CBS Corp. has a Zacks Rank #3 (Hold).
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