CBS Corporation Reports Second Quarter 2015 Results

(Press Release) CBS Corporation (NYSE: CBS.A and CBS) today reported results for the second quarter of 2015, including growth in revenue and adjusted diluted earnings per share ("EPS").

"CBS is at the center of the action during an extremely exciting time in media," said Sumner Redstone, Executive Chairman, CBS Corporation. "We continue to succeed as a result of our world-class content, and Les and his team are positioning the Company to prosper in the quarters and years ahead."

"This quarter underscores the key steps we are taking to build out our long-term growth strategy," said Leslie Moonves, President and Chief Executive Officer, CBS Corporation. "Central to that strategy is the progress we're seeing with our fast-growing, nonadvertising revenue sources, and there's so much more to come as our investment in global content and new distribution pathways pays off. We are now on target to surpass our goal of $2 billion in retransmission consent and reverse compensation revenue by 2020—thanks to a series of recent deals that reset the value of our content in the marketplace. Additionally, the launch of Showtime's streaming service and the rapid expansion of CBS All Access are generating incremental revenue streams that will continue to grow in the years ahead. Of course, our premium content remains the cornerstone of our success, and I am confident this fall's new primetime lineup will lead us to another victory next season. In fact, our schedule is so strong that we achieved solid pricing increases and the highest rates overall in the advertising upfront, and we also expect healthy increases in the scatter market throughout the year. As we lay the groundwork for a lucrative 2016 and beyond, we are also holding the line on costs, and we remain as focused as ever on investing in the best content, enhancing our strong financial position, and returning value to shareholders."

Second Quarter 2015 Results

Revenues of $3.22 billion for the second quarter of 2015 increased 1% from $3.19 billion for the same prior-year period. Affiliate and subscription fees grew 28%, driven by Showtime's distribution of the highest-grossing pay-per-view boxing event of all time, as well as 40% growth in retransmission revenues and fees from CBS Television Network-affiliated television stations. Advertising revenues decreased 3%, and content licensing and distribution revenues were down 10%, primarily reflecting lower domestic television licensing revenues, which were partially offset by higher international television licensing revenues.

Adjusted operating income was $641 million for the second quarter of 2015 compared with operating income of $730 million for the same prior-year period, reflecting higher investment in programming and digital distribution initiatives.

Adjusted net earnings from continuing operations were $365 million for the second quarter of 2015 compared with net earnings from continuing operations of $418 million for the same prior-year period, as a result of the lower adjusted operating income. Adjusted net earnings from continuing operations per diluted share for the second quarter of 2015 rose to $.74 compared with diluted net earnings per share from continuing operations of $.72 for the same quarter in 2014. Weighted average shares outstanding were 495 million in this year's second quarter, down from 581 million in the prior-year period, as a result of the Company's ongoing share repurchase program and the split-off of CBS Outdoor Americas Inc. in the third quarter of 2014.

Adjusted results for the second quarter of 2015 exclude restructuring charges of $55 million ($33 million, net of tax), which were primarily related to the Company's radio and television station operations. These restructuring activities are expected to reduce the Company's annual cost structure by approximately $70 million. For the second quarter of 2015, reported operating income was $586 million, and reported net earnings from continuing operations were $332 million, or $.67 per diluted share.

Free Cash Flow, Balance Sheet and Liquidity

For the second quarter of 2015, free cash flow was $435 million, up from $4 million in the second quarter of 2014. For the first six months of 2015, free cash flow grew to $835 million compared with $524 million for the same prior-year period, and operating cash flow from continuing operations was $881 million compared with $593 million in 2014. These increases reflect lower income tax payments as well as the timing of receipts and payments related to the previously mentioned pay-per-view boxing event.

Subsequent to the second quarter, in July 2015, the Company issued $800 million of 4.00% senior notes due 2026. The Company is using the net proceeds from this offering for general corporate purposes, including the repurchase of CBS Corp. Class B Common Stock and the repayment of short-term borrowings, including commercial paper.

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