By Amol Sharma and John Kell
CBS Corp. reported a 20% increase in fourth-quarter profit,
thanks to higher content licensing and distribution revenue, and
projected it would quadruple revenue from cable and satellite fees
over the next six years.
CBS said it expects fees from cable and satellite providers to
rise to $2 billion by 2020, up from $500 million last year. CBS
previously had projected it would boost fees to $1 billion by
2017.
The higher projection follows last year's bitter battle with
Time Warner Cable Inc. over carriage fees. CBS was widely seen as
besting TWC in that fight. Analysts have said CBS won a big
increase in its fees.
CBS Chief Executive Leslie Moonves said the new projection would
hold up regardless of the outcome of a legal battle under way
between broadcasters, including CBS, and Aereo Inc. The online
video outlet streams local stations' signals over the Web for a
monthly fee, without the permission of broadcasters. CBS and other
broadcasters have sued for copyright infringement and the Supreme
Court is scheduled to hear arguments on April 22. Aereo argues its
service facilitates consumers' legal right to receive over-the-air
TV broadcasts for free.
In their legal arguments broadcasters have argued that if held
legal, Aereo could set a precedent that would harm their ability to
collect carriage revenue for stations.
Mr. Moonves said on an earnings conference call that CBS is
confident of victory in the Supreme Court. He also said the company
has a "host of compelling business alternatives" if Aereo wins.
Those could include CBS launching its own streaming offering or
ceasing over-the-air broadcasts and delivering its programming like
a cable TV network.
CBS posted a profit of $470 million, or 76 cents a share, up
from $393 million, or 60 cents a share, a year earlier. Revenue
rose 5.8% to $3.91 billion. Investors cheered the news, sending
shares 4% higher in after-hours trading Wednesday. Meanwhile CBS
said it would speed up an existing stock-buyback program,
repurchasing $2 billion of stock in the current quarter.
CBS generates more than half of its top line from advertising,
but in recent years it has made a concerted effort to boost revenue
from non-advertising sources such as international programming
sales, domestic reruns and digital distribution deals. Content
licensing and distribution revenue grew 28% in the fourth quarter,
while subscription and affiliate fees--including those from TV
station carriage--grew 7.3%.
CBS has been actively licensing its content to online streaming
services like Netflix. Earlier this week, it announced a deal to
make many episodes in its library available via Hulu. The company
struck streaming deals with Amazon.com Inc. that helped finance
shows and extended its library deal with the company into 2016.
"We are just beginning to find a whole set of ways to monetize
our programming," Mr. Moonves said. "There is a lot more to come in
this regard."
Mr. Moonves pointed to the CBS network's NFL programming as a
top attraction for TV viewers. The broadcaster recently won the
rights to telecast several Thursday night games in the coming
season. "We're thrilled to have it," he said. "The competition was
fierce." He said CBS hopes to extend the deal for a longer
period.
Advertising revenue at CBS slid 0.5% to $2.4 billion. Local ad
revenues declined compared with the previous year, when the U.S.
presidential election generated a boost in advertising.
The latest results come as CBS is poised to complete in the
current quarter the initial public offering of its CBS Outdoor
Americas Inc., which sells ad space on billboards and bus panels
and in malls and subway stations. The transaction will move the
broadcaster closer to its target of receiving 50% of its revenue
from non-advertising sources, Mr. Moonves said.
CBS said it planned to accelerate share repurchases of Class B
stock by $1.5 billion, bringing the total stock that the company
expects to buy back in the first quarter to $2 billion.
Write to Amol Sharma at amol.sharma@wsj.com and John Kell at
john.kell@wsj.com
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