CBS joined the list of media companies riding an improved advertising market to report higher third-quarter profits.
Net income rose 53% to $317 million, or 46 cents per share, from $207.6 million, or 30 cents a share, a year ago, the company said Wednesday.
Revenues slipped 2% to $3.3 billion from $3.35 billion. A year ago, CBS benefited from first-cycle syndication sales of five key shows that brought in $300 million in revenue. The company said it its ad revenues rose 10% and that affiliate and subscription fees rose 15%.
CBS president and CEO Leslie Moonves noted that Black Rock has been the top-rated network in the new season, with its new shows getting off to successful start. Meanwhile, the broadcast advertising marketplace remains strong both nationally and locally, with robust pacing increases across the board.
With free cash flow growing, CBS declared plans to buy back $1.5 billion worth of its own share.
Revenues for the company's Entertainment segment, which includes the CBS Television Network and CBS Television Studios, fell 12% to $1.62 billion. Last year's period revenue included sales of Medium, Criminal Minds, Ghost Whisperer, Everybody Hates Chris and Numb3rs. Ad revenues at the CBS broadcast network were up 7% and prices for ads in scatter were up 35% after a strong upfront.
Operating income for the Entertainment segment fell 14% to $277.9 million.
Moonves said things would be improving in the next year, as a new retransmission contract with Comcast takes effect bringing in new revenues, and a new deal sharing the rights to the NCAA Men's Basketball Tournament lowering sports rights costs take effect. Retransmission fees are up 40% and the company will reach its target of $100 million in retrans fees this year.
At the same time, the network is talking to its affiliates about reclaiming some of the money they get for retrans. "So we are making those deals. They are not very noisy, but we are getting paid by them. And it should, over the next number of years, also amount to hundreds of millions of dollars down the road," said CFO Joe Ianniello, who noted that the biggest CBS affiliate deals don't come up till 2013 and 2014.
Moonves also described the improved economics for CBS Television Studios, which has 27 shows in production. The three dramas it produces for CBS were all sold internationally for more than $2 million an episode, which means "all three were profitable before a single episode aired."
"Within weeks of announcing Hawaii Five-0 was on our schedule, we sold it in more than 100 markets, and now it's in nearly all 200 of our overseas markets . And of course, on this show, domestic syndication is still to come," Moonves said, all of which shows that "ratings success represents just the first length in our increasingly valuable monetary content chain."
CBS' cable networks saw revenue rise 12% to $370 million. Showtime Networks' subscriptions were up 7% to 64.9 million. Earnings for the cable networks rose 33% to $170.5 million.