CBS Corporation (CBS)

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CBS (CBS)

Q3 2012 Earnings Call

November 07, 2012 4:30 pm ET

Executives

Adam Townsend - Executive Vice President of Investor Relations

Sumner M. Redstone - Founder and Executive Chairman

Leslie Moonves - Chief Executive Officer, President and Director

Joseph R. Ianniello - Chief Financial Officer and Executive Vice President

Analysts

Benjamin Swinburne - Morgan Stanley, Research Division

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

David Bank - RBC Capital Markets, LLC, Research Division

Anthony J. DiClemente - Barclays Capital, Research Division

Michael C. Morris - Davenport & Company, LLC, Research Division

David W. Miller - Caris & Company, Inc., Research Division

Laura A. Martin - Needham & Company, LLC, Research Division

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Tuna N. Amobi - S&P Equity Research

Alan S. Gould - Evercore Partners Inc., Research Division

Presentation

Operator

Good day, everyone, and welcome to the CBS Corporation Third Quarter 2012 Earnings Release Teleconference. Today's call is being recorded. At this time, I would like to turn the call over to the Executive Vice President of Investor Relations, Mr. Adam Townsend. Please go ahead, sir.

Adam Townsend

Thank you. Good afternoon, everyone, and welcome to our third quarter 2012 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 will turn the call over to Les and Joe, who will discuss the strategic and financial results. We will then open up the call to questions.

Please note that statements on this conference call relating to matters, which are not historical facts, are forward-looking statements, which involve risks and uncertainties that could cause actual 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 cbscorporation.com.

Reconciliations for non-GAAP financial information related to this call can be found in our earnings release or on our website. And with that, it's now my pleasure to turn the call over to Sumner.

Sumner M. Redstone

Thank you, Adam. Good afternoon, everyone. Today I want to start by thanking the good people at CBS for their tremendous effort during Hurricane Sandy. My thoughts go out to all those affected by the storm. I'm really glad CBS was able to help along the way.

As far as CBS's results are concerned, we have done it again, another quarter of outstanding results on our way to another phenomenal year, and I guarantee you, the momentum keeps building. I couldn't be more pleased. Clearly, CBS has the right strategy in place to take advantage of all the ways it can get paid for its industry-leading content. I'm confident, really confident, that this success will continue in 2013 and for many, many years to come. My confidence is in no small part due to the talented executives at CBS who make it all happen. Simply put, Leslie and his team know how to get this done.

And so it's my great pleasure to turn this call over to my good friend and colleague, a man I frequently call a genius for the extraordinary, brilliant ways in which he has operated CBS. And now I turn this over to Chief Executive Les Moonves.

Leslie Moonves

Thank you very much, Sumner. Good afternoon, everybody, and welcome, especially you on the East Coast that are suffering through this nor'easter yet again. This certainly has been a monumental couple of weeks. Hurricane Sandy has devastated many communities in the Northeast and ultimately affected all of us in one way or another. We wish as quick a recovery as possible to everyone in Sandy's path. And as a company, we will continue to help in that effort.

I would like to acknowledge the sacrifice and effort of all the CBS employees involved with the relief help during this difficult time. I also want to take a second to thank CBS News and our local TV and radio stations for their tireless work as well. These news outlets did what broadcasters do in times like these. They provided essential services to people in a way that can't be done by any other medium.

And of course, last night, we also had another historic event with the election. It's been a difficult campaign. But hopefully, America can come together, and we can now move forward. Once again, I want to point out the outstanding efforts by our terrific team at CBS News from primaries into the wee hours of this morning.

Now on to the business at hand. As you can see in today's release, CBS is continuing its streak of record-breaking results with all-time third quarter records in revenue, OIBDA, EPS and virtually all other key metrics as well. The fact that we were able to achieve these results in an economy that is still recovering is a testament to the remarkable transformation underway at our company.

Our base businesses continue to be extremely solid performers, and at the same time, we're growing the size of our overall revenue pie by steadily increasing on non-advertising revenue as well. During the quarter, 44% of our revenue came from non-advertising sources, a dramatic change from the less than 30% we had just a few years ago. And the good news is there's still a long way to go in our evolution, and that's why we're so encouraged about what we will accomplish in 2013.

Since we spoke with you about 3 months ago, we've taken many significant steps to provide consistent sources of growth for the quarters and years to come. First, we signed key retrans deals with DirecTV, Cablevision and AT&T that, together with our DISH deal earlier this year, represent 40% of the footprint covered by our TV stations. In total, our new retrans deals were done on terms significantly higher than anything we've done before and will help us get to our stated revenue goals even quicker than we'd hoped.

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