CBS Corp. (CBS) Thursday said its fourth-quarter earnings and revenues increased from last year to record highs. However, the stock dropped sharply following the announcement as the results fell short of Wall Street estimates.
The New York-based media conglomerate reported adjusted earnings of $1.50 per share, representing a 25% year-over-year increase aided by higher operating margins and a lower income tax rate. Earnings, however, missed the forecast owing mainly to a slump in the entertainment segment that witnessed a 1% contraction amid lower content licensing activities.
Adjusted profit, excluding special items, was $561 million or $1.49 per share during the three-month period. In the fourth quarter of 2017, the company had posted a net loss of $41 million or $0.10 per share.
In the most recent quarter, total revenues rose 3% to $4 billion but missed market expectations. The management’s efforts to ramp up the relatively new direct-to-consumer platforms are paying off well. The segment, which currently has 8-million subscribers, is expected to become the main growth driver in the long term.
The entertainment segment that witnessed a 1% dip in revenues amid lower content licensing activities
Reflecting the strong momentum in the direct-to-consumer streaming services, Affiliate and Subscription fee revenues climbed 11%. Advertising revenues increased 7% helped by record political ad sales during the midterm elections. Meanwhile, Content Licensing and Distribution revenues dropped 11%.
“CBS delivered our best-ever quarterly and full year results as we continue to position our Company for even stronger long-term growth. Our strategy of creating more of the premium content that audiences want and making it available across new and traditional platforms continues to pay off, driving quarterly increases in subscribers at CBS and Showtime,” said acting CEO Joe Ianniello.
During the December quarter, the management repurchased about 2.1 million shares for $100 million.
After falling to a three-year low in December, CBS shares gathered momentum this year. The stock gained steadily on Thursday and closed the session sharply higher. During the extended trading hours, however, the stock lost about 3% following the earnings report.