CBS expands streaming services as earnings beat expectations

8 August 2017: CBS Corp is taking its streaming service abroad and launching an online sports service to appeal to the growing number of viewers who prefer to watch their favorite shows online, executives said on Monday.

CBS, owner of the most-watched U.S. TV network, will launch its CBS All Access service internationally in the first half of next year, starting in Canada, the company said as part of second-quarter earnings.

The New York-based broadcaster is also planning to launch an online streaming sports service, which is yet to be named, announced CBS CEO Leslie Moonves on a post-earnings call. CBS shares rose 0.73 percent in extended trading.

CBS said it will have more than 4 million streaming subscribers between All Access and its Showtime streaming service by year-end. The company had previously said it was anticipating 8 million subscribers by 2020, a goal it now said is conservative.

Expanding its online streaming services is part of a push by CBS, whose shows include "The Big Bang Theory" and "Homeland," to decrease its reliance on advertising as more viewers go online.

CBS reported on Monday that 40 percent of its total revenue is from advertising, down from more than 70 percent 10 years ago.

"Our revenue is now faster growing and more reliable," Moonves said.

The New York-based broadcaster reported a bigger-than-expected profit and revenue for the second quarter, driven by higher content licensing and subscription fees.

Advertising sales rose 4.3 percent to $1.3 billion in the quarter from a year earlier, boosted by the broadcast of the NCAA basketball championship.

CBS, which owns cable channel Showtime and publishing house Simon & Schuster, said affiliate and subscription fees revenue – which includes revenue from cable TV operators and from its own streaming content – rose 15.7 percent in the quarter.

Content licensing and distribution revenues increased nearly 12 percent. CBS has signed content licensing deals with Hulu, Verizon Communications Inc, Alphabet Inc's Google and AT&T Inc's DirectTV Now.

By year-end, CBS expects its retransmission consent and reverse compensation, which is the revenue from distributors and broadcast affiliates, to exceed the halfway mark to its $2.5 billion revenue goal for 2020.

Excluding one-time items, CBS reported a profit of $1.04 per share, beating analysts' average estimate of 98 cents, according to Thomson Reuters I/B/E/S.

CBS said revenue rose 9.4 percent to $3.26 billion.

Analysts on average had expected revenue of $3.09 billion.