CBS sees Q3 gains after strong Q2 results


After beating expectations for Q2 CBS Corporation is looking for growth to continue in Q3 for its local radio and TV groups. And looking further down the road, CEO Les Moonves (pictured) is telling Wall Street to expect retransmission consent and fees from TV affiliates to become really big numbers.

CFO Joe Ianniello said that, excluding political, local TV revenues are pacing up in the low single digits in Q3. Of course, this is a non-election year and political was strong last year. Moonves is already predicting that political will begin to heat up in Q4 ahead of next year’s big presidential election. For this year, auto, particularly domestic, is still driving growth, despite the problems with the auto supply chain from Japan’s earthquake and tsunami earlier in the year.

For radio the Q3 story is much the same. Radio is pacing up in the low single digits, Ianniello said.

During his call, Moonves focused on how some of the revenue streams now growing are nearly all dropping to the bottom line. Advertising sales growth, once commissions are paid, is all profit. Also, retransmission consent payments and reverse comp from affiliates are basically all dollars that go 100% to profits.

Moonves is really bullish on retrans. He’s already predicted that CBS will get close to $250 million in 2012 – and that’s hardly the end of the story, as detailed in this audio excerpt.


And while reverse comp is a growth area, Moonves dismissed any notion of affiliates trying to band together to fight the networks. He insisted that while some deals have been tougher than others to reach, CBS has had good negotiations with its affiliates over the payments.

RBR-TVBR observation: Sumner Redstone began the call by repeatedly calling Moonves a genius. The CEO was gracious in accepting the praise without appearing to claim the title. What is clear is that CBS weathered the recession and is now a cash flow machine. That’s resulted in repeated dividend increases and stock buybacks – with no sign of any slowdown. The company’s biggest shareholder, Redstone, is certainly doing well as a result.