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CBS Earnings Rise Higher Revenues, Share Buybacks

Paul Ausick

CBS Corp. (CBS) reported third quarter 2013 earnings after markets closed Wednesday. For the quarter, the broadcast and cable network posted diluted earnings per share (EPS) of $0.80 on revenues of $3.63 billion. In the same period a year ago, the company reported EPS of $0.60 on revenues of $3.27 billion. Third-quarter results compare to the FactSet consensus estimate for EPS of $0.76 and the Thomson Reuters estimate of $3.47 billion in revenues.

Revenue growth of 11% drove earnings growth of 26%. Content licensing and distribution revenues grew the most, up 18%, and advertising revenues rose 4%. Stock buybacks for the year to date total 39.7 million shares at an average price of $46 a share for a total of $1.84 billion.

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CBS attributed part of its earnings growth to the share buyback program and part to growth in operating income. Operating income rose 4% and adjusted diluted EPS grew by 19%, so buybacks represent the largest part of the company’s earnings growth. That’s one way to keep stockholders happy.

The company’s executive chairman said:

CBS's third quarter proves once again why content is king. Our programming is becoming more valuable all the time as we continue to take advantage of the ever-expanding multiplatform world.

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The CEO elaborated:

Through our studio, we have an ownership interest in most of these shows, meaning that their success not only boosts our base business, but also our newer revenue streams as well, including very strong growth in retransmission consent fees, reverse compensation, international sales and all the opportunities afforded to us by exploding advances in technology. Plus, we are working toward a new advertising model in which we get paid for the significant, additional viewing that is increasingly taking place after a show first airs.

CBS did not offer guidance in its press announcement, but FactSet estimates fourth-quarter EPS at $0.85 and full-year EPS at $3.09, rising to $3.52 in fiscal 2014.

Shares are down about 1.3% in after-hours trading at $58.86 in a 52-week range of $33.04 to $60.91. The consensus Thomson Reuters price target for the shares was around $63.00 before today’s report.

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