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CBS Revenue Drops Among Higher Content, Streaming Spend

The company, led by acting CEO Joe Janiello, is expected to complete its recombination with Viacom in early December.

CBS Corp., which is expected to complete recombination with Viacom in early December, reported lower third-quarter revenue on Tuesday, exceeding Wall Street estimates, despite rising content costs and rising streaming services.

The company, led by acting CEO Joe Janiello, reported adjusted earnings of 95 cents a share, up from $ 1

.24 a share in the year-ago period. Wall Street's consensus estimate was 92 cents a share.

Third-quarter operating income of $ 501 million compared to $ 690 million for the same period a year ago and "included expenses incurred in the third quarter in connection with the forthcoming merger with Viacom." Adjusted operating income fell 21 percent to $ 581 million from $ 736 million in the prior year period "as a result of increased content investments, including more series produced across multiple platforms, as well as direct customer to streaming services transmission. "

Third quarter revenue reached $ 3.30 billion, up 1 percent from an analyst estimate of $ 3.37 billion." Affiliate and subscription revenue increased 12 percent, driven by the increase in CBS Television Network affiliate stations fees and retransmission revenue, as well as the company's in-person direct-to-consumer streaming service growth, "the company said." Content licensing and distribution revenue increased 1%, mainly as a result of higher sales of serials produced to third parties. "

Advertising revenue decreased, as expected, by 7% from Q3 2018, when the company has" recorded sales of political advertising fueled by midterms in 2018. "But Ianniello emphasized" steady core network growth of 2 percent in the quarter. "

The results came even after CBS's broadcast ratings were downgraded in the third quarter. Bernstein analyst Todd Uenger wrote in his earnings preview: "Conventional C3, adult 18-49 prime audiences for the big 4 broadcast networks fell 13 percent" from a year ago in the third quarter. "CBS declined further (18 percent) as part of the underperformance was driven by the eclipse with AT&T, which lasted from July 20 to August 9, as well as those related to Nexstar CBS, which continued from the beginning of the quarter through the end of August. "

In the meantime, the streaming services of CBS Corp., CBS All Access and ShowTime were expected to post profits in the recent period thanks to such broadcasts as CBS All Access." Why Women Kill . And the continued increase in the retransmission consent fee was also expected to improve the results as they did.

"We delivered record revenue for the third quarter as we continue to increase our investment in our premium content and direct streaming services to consumers, which is the cornerstone of our growth strategy," Ianello said. " During the quarter, our direct-to-consumer revenue from CBS All Access and Showtime OTT grew 39 percent year-over-year, driven by a strong list of original programs. Meanwhile, revenue from Retransmission, Reverse Computers and Virtual [distributor] grew by 18 percent and our total partnership and subscription fees increased by 12 percent, representing more than one-third of our total revenue in the third quarter. "

He added:" Our revenue from content licensing is also growing as we increase programming production across all our platforms, including five new hit shows that we have just launched on the largest media platform – CBS Television Network , which is about to end the season as the most watched network for the 12th consecutive year. "

Looking at the end of the year period, Janiel says," In the fourth quarter, we have a great programming schedule for Showtime, including the return of favorite Shameless and Ray Donovan along with a number of exciting new series such as The L Word: Generation Q . So we build great momentum when we are close to our merger with Viacom and head towards 2020. "

Much of Tuesday's call for a profit conference is expected to focus on the future prospect of CBS's assets within the recombined ViacomCBS, which is expected to be concluded when the Viacom mega deal closes around early December.

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