CBS stock in green after Q1 profit beats consensus estimate

CBS Corp. (CBS) reported a 13% increase in first-quarter earnings as higher advertising, higher station affiliation fees, growth from digital initiatives, and the international licensing of new series drove revenue higher. Earnings and revenue came in above Street’s expectations, driving the stock towards the north by about 2% in the extended hours trading.

With revenue rising by 13% to $3.8 billion, the mass media company’s earnings from continuing operations increased by 13% to $511 million or $1.32 per share. Adjusted EPS grew 26% to $1.34. The growth in the company’s top-line was backed by the expansion of premium content from its relationships with Netflix (NFLX) and Apple (AAPL).

CBS’ affiliate and subscription fees increased by 16%, thanks to its deals with Hulu, YouTube TV, DirecTV Now, and Sony PlayStation Vue. The growth of affiliate and subscription fee revenues was led by 25% higher retransmission revenues and fees from CBS Television Network-affiliated stations as well as growth from digital initiatives, including its owned streaming subscription services.

Content licensing and distribution revenues surged 18%, helped by growth from the international licensing of new series as well as the start of renewal periods for licenses of library programming. Advertising revenues rose 8%, which includes its acquisition of Network Ten in the fourth quarter of 2017.

The company remained highly vulnerable to the advertising market as the major portion of revenues comes from the sale of advertising on its broadcast, cable networks and television, syndicated programming as well as online properties. Also, streaming services providers like Netflix is stealing away consumers from the broadcast TV.

CBS benefited from rising content demand, sturdy digital presence, upfront fees from traditional distribution partners, expansion of direct-to-consumer business, increase in retransmission rates, and higher international content licensing fees.

Entertainment revenue grew 16% backed by higher station affiliation fees, growth from digital initiatives, the international licensing of new series and the start of renewal periods for licenses of library programming.

Cable Networks revenues advanced 12% helped by the growth of the Showtime subscription streaming service and the start of the renewal period for the licensing of Showtime original series. Local media revenues rose 1% on higher retransmission revenues while publishing revenues declined 1%.

During the first quarter, the company repaid more short-term debt borrowings and used lesser cash for payment of dividends. CBS lowered the purchase of its common stock during the latest quarter, thus leading to a decline in payment of payroll taxes in lieu of issuing shares for stock-based compensation. The company had used lesser cash for financing activities compared to last year.

Shares of CBS ended Thursday’s regular trading session down 0.51% at $48.74. The stock had been trading between $47.54 and $68.75 for the past 52 weeks.