CBS Quarterly Earnings: Short of Expectations but Still a Strong Show

CBS spent yesterday reporting their first-quarter earnings, and among all the hot takes, I thought I’d take the opportunity to share a few key takeaways…

MediaPlayNews, in their analysis, emphasizes revenue growth and the good performance of streaming services in offsetting growing costs. Overall revenue, they say, is up 11% to $4.17 billion. The entertainment unit, which is comprised of CBS All Access, CBSN and other streaming services, contributed $3.1 billion of that, and itself was up 15% year on year. The extra revenue from streaming services offset Showtime OTT’s 3% revenue drop to $552 million. For those of you unaware of what OTT is (like I was about half an hour ago) - OTT is “over-the-top”, commonly used to describe a streaming service that supplements or extends a broadcast service like Showtime. Also in the piece, MediaPlayNews highlights that subscribers for CBS’s on-demand services (which combine CBS All Access with Showtime OTT) grew a substantial 71% year on year, from 5.3 million in 2018, to 9 million in 2019.

But what about the rest of CBS’s content that isn’t streaming? A piece from Bloomberg highlights that while revenue growth was strong for “The Eye”, they missed analysts expectations for the first quarter. Expectations came in at $4.3bn while the final tally came in at a paltry $4.17bn. Bloomberg attributes the miss to a drop in syndication sales, which fell year on year. From the piece: “CBS gets its revenue chiefly from advertising, content licensing, and fees from subscribers and affiliated TV stations that carry its programs. The company has pushed hard to increase them all. Though the Super Bowl audience slumped from past years, ad sales climbed 18%. TV networks are also squeezing extra dollars out of smaller audiences by making cable-TV services and affiliate stations pay higher fees. CBS has been the most-watched prime-time network in the US this TV season, and airs five of the 10 most-watched shows. But syndication sales fell 3.2%.”

The Hollywood Reporter looks more at the business side of the business in their analysis, repeating the refrain that signs point to a possible CBS-Viacom merger, but without much concrete evidence.

And finally - where does that all leave Star Trek? TrekMovie.com points out that Acting CEO Joseph Ianniello specifically called out the new Picard Show in the earnings call, saying “We will launch a whole new Star Trek series starring Sir Patrick Stewart as Captain Jean-Luc Picard, which will have strong international appeal.”

TrekMovie notes: “It’s noteworthy that the CEO talked about the international appeal of the Picard show because as of now, it is not known when or where the show will be available outside of the USA.”

However, also on the call, Ianniello teased that CBS All Access could soon be expanding to Latin America and Europe: “We launched All Access in Canada a year ago and followed it up with 10 All Access in Australia last fall. Next up, we will launch our direct-to-consumer services in Latin America and Western Europe, two regions where we see high growth potential and strong interest in our premium content.”

Hm. Seems like they could really benefit from some pre-existing infrastructure like Paramount+ just announced...I’m not sayin’, I’m just sayin’.