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CBS Posts Record Fiscal Quarter

12 Feb, 2014 By: Erik Gruenwedel

Media company cites subscription streaming for contributing to a 28% gain in content licensing and distribution revenue

CBS Corp. Feb. 12 reported fourth-quarter (ended Dec. 31) entertainment revenue of $2.2 billion, which was up 15% from revenue of $1.9 billion during the previous-year period. Notably, a 28% increase in subscription streaming licensing and distribution revenue — both domestically and abroad — contributed to the surge.

Pre-tax operating income in entertainment grew 27% to $418 million, from $328 million for the same prior-year period. This increase was partially offset by higher investment in television content. Overall, CBS generated record revenue of $3.9 billion, up 6% from the previous-year period.

CBS has aggressively ramped up licensing efforts with SVOD services such as Amazon Prime Instant Video (through 2016) and Hulu Plus for “Elementary” and “Blue Bloods,” including previously mentioned Prime exclusives around summer series “Under the Dome,” and newcomer “Extant,” starring Halle Berry. “Elementary” was also licensed to ion TV and WGN America in Chicago.

“Thanks to these deals, ‘Elementary’ will generate more syndication revenue per episode than any show ever has,” CEO Les Moonves said on the fiscal call.

Moonves said CBS programming continues to perform well on Hulu’s SVOD subsidiary, prompting license extensions and expansions. Indeed, the CEO said CBS has now upped its 2017 goal of $1 billion in revenue from retransmission and reverse compensation to $2 billion by 2020. The latter is the practice of a TV station paying the network an affiliation fee.

Moonves said the advent of newer SVOD services such as Amazon Prime, Hulu Plus and Xfinity Streampix portend a growing revenue source from over-the-top video distribution. For example, the executive said the “CSI” and “NCIS” franchises have more than 300 episodes and 200 episodes, respectively, available to license to alternative markets.

Moonves said Netflix is evolving as a major international distribution source, replacing existing second-tier syndication markets.

“Every market Netflix has opened in, we have been a major [license] player,” he said. “We are very encouraged that the pipeline at this level is going to continue for many years. Each license deal that we do is very different than the last one.”

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