CBS Corp. (CBS) Wednesday reported a rise in fourth-quarter profit mostly on better margins that offset a drop in revenue from Entertainment and Local Broadcasting businesses.
The broadcaster's earnings for the quarter came in ahead of analysts' expectations, while the revenues missed estimates. CBS shares dropped nearly three percent in after-hours trade on the New York Stock Exchange following the announcement.
Moving forward, CEO Leslie Moonves believes the company's recent roll out of initiatives will hasten growth in an improving marketplace. Moonves cited key retransmission agreements, an extension of the NFL contract as factors expected to propel growth at CBS Network. The flurry of election activity and a rebound in automotive sector also augurs well for its Local Business, Moonves added.
"As our momentum builds and our revenue mix becomes more steady and recurring, we are positioned to enhance margins, drive earnings, and return significant value to our shareholders for many years to come," Moonves said.
CBS Corp.'s businesses revolve around Content Group, comprising Entertainment, Cable Networks, and Publishing segments; and Local Group consisting of Local Broadcasting and Outdoors.
Entertainment revenue, which accounts for over half the business, edged down 1 percent from last year, while the year-ago quarter included the second-cycle syndication sale of "CSI: Crime Scene Investigation" television series. Partly offsetting the decline were new licensing agreements and improved retransmission revenues, with advertising revenues almost flat.
Cable Networks segment revenues grew 7 percent from last year, led by rate increases and growth in subscriptions to Showtime Networks, CBS Sports Network, and Smithsonian Networks. Publishing segment revenues edged down 1 percent due to lower print book sales.
Local Broadcasting segment revenues slid 12 percent, due to lower political advertising sales as well as lost revenues resulting from the NBA lockout during 2011.
Net income for the fourth quarter increased to $370 million or $0.55 per share from $283 million or $0.41 per share last year.
Excluding items, earnings were $384 million or $0.57 per share, compared to $320 million or $0.46 per share last year.
On average, 24 analysts polled by Thomson Reuters expected earnings of $0.53 per share for the quarter. Analysts' estimates typically exclude special items.
The New York-based company's revenue declined to $3.78 billion from $3.9 billion a year ago. Twenty-two analysts estimated revenue of $3.91 billion for the quarter.
During the quarter, the company repurchased 7 million shares of its Class B common stock for $170 million, bringing repurchases for the full year to 42.2 million shares for $1.02 billion.
CBS closed Wednesday at $29.57, down $0.22 or 0.74%, on a volume of 8.4 million shares on the NYSE. In after-hours, the stock further dropped $0.82 or 2.77%.
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