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CBS reports strong mid-year results amid Moonves controversy

CBS has reported growth across the board for its second quarterly earnings, beating analyst expectations, and despite recent controversy surrounding its chairman and CEO Leslie Moonves (pictured).

Particular strengths included its revenue growth, which increased by 6% for the second quarter for 2018, to US$3.47 billion. This is up from $3.26 billion from the same prior-year period.

Affiliate and subscription fee revenues were also up by 17%, led by 25% higher retransmission revenues and fees from CBS Television Network affiliated stations as well as 70% growth in digital initiatives, including the company’s owned streaming subscription services.

“Our direct-to-consumer platforms, CBS All Access and Showtime OTT, are greatly exceeding our expectations,” said Moonves. “Our goal was to have eight million subscribers combined by 2020, and we are now on track to hit that number in 2019.”

CBS now predicts that CBS All Access and Showtime OTT will have 16 million domestic subscribers by 2022.

Content licensing and distribution revenues were up by 4% for the quarter, while advertising revenues increased by 2%.

Operating income was the only segment to see a drop by 4% to $659 million from $690 million for the same year-period. This included costs for restructuring and other corporate matters.

Adjusted operating income, however, was up 1% to $694 million from $690 million for the same prior-year period, reflecting the revenue growth, which was offset by a higher investment in programming and digital initiatives.

Analysts were told not to address the recent sexual harassment claims made against Moonves, or the ongoing legal spat with Shari Redstone’s National Amusements, because of pending litigation and “on advice of counsel”.

As a result, CBS shares were down by nearly 1.4% at market cap, perhaps relating to unanswered questions and concerns shareholders may have.

Moonves said: “Looking ahead, we are set up for continued growth in 2018, and we feel more confident than ever that CBS is uniquely positioned to succeed as a direct-to-consumer global content company.”