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Q2 2011 Earnings Call

August 02, 2011 4:30 pm ET


Sumner Redstone - Founder and Executive Chairman

Leslie Moonves - Chief Executive Officer, President and Director

Adam Townsend - Executive Vice President of Investor Relations

Joseph Ianniello - Chief Financial Officer and Executive Vice President


Michael Morris - Davenport & Company, LLC

Jessica Cohen - BofA Merrill Lynch

Anthony DiClemente - Barclays Capital

Benjamin Swinburne - Morgan Stanley

Laura Martin - Needham & Company, LLC

Michael Nathanson - Nomura Securities Co. Ltd.

Marci Ryvicker - Wells Fargo Securities, LLC

David Miller - Caris & Company

Douglas Mitchelson - Deutsche Bank AG

John Janedis - UBS Investment Bank

David Bank - RBC Capital Markets, LLC



Good day, everyone, and welcome to the CBS Corporation Second Quarter 2011 Earnings Release Teleconference. Today's call is being recorded. At this time, I'd like to turn the call over to the Executive Vice President of Investor Relations, Mr. Adam Townsend. Please go ahead, sir.

Adam Townsend

Good afternoon, everyone, and welcome to our Second Quarter 2011 Earnings Call. Joining me for today's discussion are Sumner Redstone, our Executive Chairman; Leslie Moonves, President and CEO; and Joe Ianniello, Executive Vice President and CFO. Sumner will have opening remarks, and we'll turn the call over to Les and Joe, who will discuss the strategic and financial results. We will then open your call to questions.

Please note that during today's conference call, comparisons for the June year-to-date period are against adjusted 2010 results. Reconciliations for non-GAAP financial information related to this call can be found in our earnings release or on our website.

In addition, statements in this conference call relating to matters, which are not historical facts, are forward-looking statements, which involve risks and uncertainties that could cause results to differ. Risks and uncertainties are disclosed in CBS Corporation's news releases and securities filings. A webcast of this call and the earnings release related to today's presentation can be found on the Investors section of our website at

With that, it's now my pleasure to turn the call over to Sumner.

Sumner Redstone

Thank you, Adam. Good afternoon, everyone. I thank you for being with us today. CBS's second quarter performance was absolutely terrific. Our results, which follow up a remarkable first quarter, demonstrate one more time that our company is operating from a clear position of strength. Our world-class content is at the very top of its game. Most important, a continuous demand -- a premium across every distribution platform. Our success is the result of the long-term strategy [indiscernible] to grow revenues in diverse ways, to manage our expenses with discipline, to deliver healthy profits and to create value by returning cash to shareholders. And in the second quarter, CBS achieved all of that and even more. But you know, strategy isn't enough. You need a management team to execute that strategy. We are fortunate to have an executive in charge of CBS with the baddest greatest income and management team to match. And as a result, CBS keeps just getting better and stronger. I have the utmost confidence that we are poised to achieve greater heights in the years to come.

And with that, to tell you more about the extraordinary second quarter performance, I'll turn the call over to my friend and colleague, CBS President. But before I do, many of you would have heard me say that Leslie is a genius. Why? Because Leslie's performance in operating CBS is a performance of a genius. And with that, I'll turn it over to CBS's President and CEO, my very good friend, Les Moonves.

Leslie Moonves

Thank you, Sumner. Thank you very much for those kind words. And good afternoon to everybody. We do indeed thank you for joining us once again today. Yes, it's been a very interesting day. It's been a very interesting week. There are certain things we can't control like what goes on in Washington, but we can control what we do at CBS. And nonetheless, despite what may have happened, we are very pleased to share our exceptional second quarter results with you today.

Across every key financial metric, we turned in a stellar performance, and the numbers speak for themselves. Despite a lack of political dollars, tough comps and some challenging macroeconomic factors, revenue was up 8%, OIBDA was up 51%, and diluted EPS was up 164%. We achieved these results, thanks to strong performances from our business units across the board. National and local, content and distribution, our operations continue to produce solid growth and increasing profits. We also achieved these results by doing exactly what we said we were going to do at our Analyst Day earlier this year. At that event, we laid out some of the most exciting areas of growth for our company that you may not have even be aware of. Let's take a minute to look at how we're delivering on these opportunities since our last call.

First, we said we would drive revenue and profit growth not just from traditional sources but increasingly from emerging platforms as well. So building on the Netflix deal we signed in the first quarter, we entered into a nonexclusive licensing agreement with Amazon a few weeks ago. This deal is another example of how we are capitalizing on the value of our content by selling into new distributors without taking away from established revenue streams. New entrants are coming into the marketplace all the time, and we will look to negotiate additional prudent online distribution deals going forward.

Next, we also emphasized that the demand for CBS content has never been stronger overseas. During the quarter, we screened our new shows to the international television buying community, leading to increased sales of our programming around the world. And just last week, we announced the new separate nonexclusive agreement with Netflix International to stream our programming in Latin America and Canada. International expansion is a key strategic growth area for our company, and this deal represents a significant step in that process.

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