CBS Corporation Reports Fourth Quarter 2015 Results

(press release) CBS Corporation today reported results for the fourth quarter and full year of 2015, including its highest-ever quarter in revenue and adjusted net earnings from continuing operations per diluted share ("EPS").

"We had a terrific fourth quarter, and CBS is now in position to build strong momentum throughout 2016," said Leslie Moonves, Chairman, President and Chief Executive Officer, CBS Corporation. "Our base businesses are growing well, thanks to the strength of our premium content and the continued improvement in the advertising marketplace. In addition, with Super Bowl 50 here in the first quarter and political spending ramping up into the fourth, we expect 2016 will be a very good year for advertising. At the same time, our other high-margin revenue streams continue to thrive. Retransmission consent and reverse compensation are set to hit $1 billion in 2016 — a year earlier than expected — and are on pace to surpass $2 billion in 2020. The international market is extremely exciting as well, with demand for our CBS programming higher than ever and new deals that are changing the way we license the Showtime brand overseas. Plus, our new streaming services — CBS All Access, CBSN, and Showtime over the top — are attracting a whole new set of younger viewers on better economic terms. So no matter how quickly the digital world changes — and no matter how viewers want their content — CBS is positioned to succeed."

Fourth Quarter 2015 Results

Revenues of $3.91 billion for the fourth quarter of 2015 were up 6% from $3.68 billion for the prior-year period. The growth was driven by a 16% increase in content licensing and distribution revenues, reflecting higher international television licensing sales. Affiliate and subscription fees grew 13%, driven by continued increases in retransmission revenues and fees from CBS Television Network affiliated stations. Advertising revenues increased 1%, led by 8% growth in network advertising, which was partially offset by the benefit to Local Broadcasting in 2014 from political revenues.

Operating income for the fourth quarter of 2015 was $357 million, including a pretax noncash impairment charge of $484 million ($297 million, net of tax benefit) to reduce the carrying value of radio FCC licenses to their fair value and a gain from the sale of an Internet business in China of $120 million ($128 million, including tax benefit). On an adjusted basis, operating income of $747 million for the fourth quarter of 2015 grew 6% from operating income of $707 million from the same prior-year period, primarily reflecting the higher revenues.

For the fourth quarter of 2015, net earnings from continuing operations was $251 million, or $.53 per diluted share, and included several discrete items that totaled $185 million, net of tax, or $.39 per diluted share. On an adjusted basis, net earnings from continuing operations were $436 million, an 8% increase from net earnings from continuing operations of $402 million for the same prior-year period, principally driven by the higher adjusted operating income. Adjusted EPS for the fourth quarter of 2015 grew 19%, to $.92, from EPS of $.77 for the same prior-year period. During the fourth quarter of 2015, weighted average shares outstanding were 474 million, down from 523 million in the prior-year period, as a result of the Company's ongoing share repurchase program.

Adjusted results for the fourth quarter of 2015 excluded restructuring charges of $26 million ($16 million, net of tax benefit), and the above-mentioned impairment charge and gain from the sale of an Internet business in China. No adjustments were made to reported results for the fourth quarter of 2014.

Reconciliations of non-GAAP measures to reported results are included at the end of this earnings release.

Entertainment (CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive, and CBS Films)

Entertainment revenues of $2.46 billion for the fourth quarter of 2015 grew 9% from $2.26 billion for the same prior-year period. The increase was driven by 8% growth in network advertising revenues, resulting from a strong scatter market. In addition, affiliate and subscription fees were up 45%, and content licensing and distribution revenues grew 7% as a result of increased international television licensing revenues.

Entertainment operating income for the fourth quarter of 2015 was $347 million, up from $253 million for the same prior-year period, primarily reflecting the increased revenues.

Cable Networks (Showtime Networks, CBS Sports Network, and Smithsonian Networks)

Cable Networks revenues of $562 million for the fourth quarter of 2015 rose 13% from $499 million for the same quarter in 2014, driven by higher revenues from the international licensing of Showtime original series.

Cable Networks operating income was $228 million for the fourth quarter of 2015 compared to $241 million for the same prior-year period, as the fourth quarter of 2014 benefited from the licensing of higher-margin titles.

Publishing (Simon & Schuster)

Publishing revenues for the fourth quarter of 2015 of $233 million rose 8% from $215 million for the same prior-year period, driven by growth in print book sales. Digital books represented 21% of total Publishing revenues during the quarter. Bestselling titles for the quarter included The Bazaar of Bad Dreams by Stephen King and Crippled America by Donald J. Trump.

Publishing operating income for the fourth quarter of 2015 was $34 million, up from $25 million for the same prior-year period, primarily reflecting the higher revenues.

Local Broadcasting (CBS Television Stations and CBS Radio)

Local Broadcasting revenues for the fourth quarter of 2015 were $719 million compared with $785 million in the same prior-year period. CBS Television Stations revenues declined 11%, as 2014 benefited from strong political spending associated with midterm elections. Growth in affiliate and subscription fees partially offset the decline. CBS Radio revenues were down 5%, reflecting continued softness in the radio advertising marketplace and lower political advertising.

Local Broadcasting operating income for the fourth quarter of 2015 was $232 million compared with $292 million for the same prior-year period, primarily reflecting the lower revenues.

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