The year seems to be lucky for
) as it continues to post record quarterly profits. The company
posted third-quarter 2013 adjusted earnings per share (EPS) of 76
cents, which came in line with the Zacks Consensus Estimate and
rose 19% year over year. Higher operating income and share
buybacks aided the bottom line.
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Including earnings from discontinued operations, EPS was 80
cents, rising 33.3% from the year-ago quarter.
However, CBS Corp's third-quarter 2013 performance failed to
cheer the market as the stock price dropped 0.5% within a day of
the earnings announcement. However, year to date, it has amassed
a return of 52.8%.
In the said quarter, total revenue was $3,634.0 million that
surpassed the Zacks Consensus Estimate of $3,531 million and
increased 11.3% from the prior-year quarter. This growth in
revenues was owing to 4.3% rise in advertising revenues to $1,856
million, 17.5% rise in content licensing and distribution
revenues to $1,094 million and 23.2% increase in affiliate and
subscription fees to $611 million.
Another driving factor was renewal of the
Time Warner Inc.
) cable deal at beginning of the quarter, which restored CBS
Corporation's ties with the cable company. The agreement
put to an end the prolonged dispute between the two companies.
Operating income before depreciation and amortization (OIBDA)
increased 4.1% to $941 million primarily driven by double digit
revenue growth, partly offset by increased investment in
television content and stock-based compensation. However, OIBDA
margin contracted approximately 200 basis points to 26.0%.
revenues, comprising Entertainment, Cable Networks and
Publishing, increased 16.3% to $2,704 million due to strong
performances across the segment.
revenues rose 12.1% to $1,884 million from the year-ago quarter,
driven by increase an in domestic licensing as well as
higher advertising and network affiliation revenues. The
segment's OIBDA grew 12.2% to $431 million as strong revenue
growth was partly offset by the company's increased investment in
Continuous growth in licensing revenues and affiliate revenues
' revenues to mark an increase of 36.7% to $596 million.
Moreover, growth in cable networks revenues helped the segment's
OIBDA to increase 15% to $261 million, partly offset by a rise in
sports programming costs.
revenues rose 6.7% to $224 million due to 39% increase in the
sales of digital books. The segment's OIBDA increased 10.3% to
$43 million on the back of higher revenues, partly offset by
expanding royalty and advertising expenditure.
revenues, including Local Broadcasting and Outdoor Americas, came
in at $982 million, down 1.3% from the prior-year quarter
revenues decreased 3% to $641 million as absence of political
advertising offset the higher retransmission fees. CBS Television
Stations revenues fell 6% whereas CBS Radio revenues inched up 1%
due to the new CBS Sports Radio network. The segments' OIBDA
increased 15% to $181 million due to lower revenues.
revenues rose nearly 2.1% to $341 million on the back of top line
growth in the U.S. Outdoor Americas' OIBDA increased 4.8% to $110
million in the quarter. The company is likely to spin off the
Outdoor Americas division as a standalone REIT IPO in early Q1
Other Financial Details
CBS Corporation ended the quarter with cash and cash equivalents
of $226 million, long-term debt of $5,944 million, and
shareholders' equity of $9,671 million. The company generated
cash flow from operations of $269 million and incurred capital
expenditures of $57 million. Free cash flow of $402 million was
generated during the quarter.
In the quarter, CBS Corporation repurchased 5.3 million shares
for $279 million, bringing the year to date total to 39.7 million
shares at a cost of $1.84 billion.
The company extended its current share repurchase authorization
to a total of $6 billion as it enhanced the share repurchase
program by an additional $5.1 billion. Since the inception of the
share repurchase plan in Jan 2011, the company bought back $4.03
billion worth of shares.
On Sep 30, 2013, CBS Corporation concluded the divestment of its
Outdoor advertising business (Europe and Asia) for $225 million.
The transaction resulted in a gain of $147 million, partly offset
by an after-tax charge of $110 million.
CBS Corporation is poised to benefit from its strategic expansion
initiatives. We remain optimistic about this Zacks Rank #3 (Hold)
stock and expect its growth momentum to continue in 2013 and
spill over to 2014 based on reverse compensation from affiliates,
strong demand of its content, digital distribution, syndication
sales and retransmission consent. The company also expects CBS
Television Network to be a major growth driver. Moreover, the
company is developing a new advertising model, which will allow
it to reap profits following the first telecast of a show.
Notably, non-advertising revenues now account for 43% of the
company's total revenue. CBS Corporation is focused on lowering
its dependency on advertising and is concentrating on increasing
subscription based revenue channels. The move is a commendable
one as advertising revenues are highly susceptible to economic
Alongside, CBS continues to benefit from its streamlining deals.
Significantly, the company strengthened its ties with
) by extending its multi-year streaming video deal for select
library content. Moreover, it entered into a deal with
). These measures facilitate CBS to monetize its content.