CBS to ex­pand its stream­ing ser­vice glob­ally

Broad­caster plans to be­gin its in­ter­na­tional push in Canada; profit falls but tops fore­casts.

Los Angeles Times - - COMPANY TOWN - By Meg James meg.james@la­

Ven­er­a­ble U.S. broad­caster CBS Corp. said it plans to ex­pand its CBS All Ac­cess stream­ing ser­vice glob­ally, be­gin­ning with Canada early next year.

CBS re­vealed its in­ter­na­tional am­bi­tions Monday as part of an ef­fort to fur­ther bol­ster its $5.99-a-month stream­ing ser­vice as a hedge against dra­matic changes in viewer be­hav­ior.

“We are very aware of the in­ter­na­tional suc­cess that other stream­ing com­pa­nies have had,” CBS Chief Ex­ec­u­tive Les­lie Moonves told an­a­lysts Monday in a con­fer­ence call, a ref­er­ence to stream­ing gi­ant Net­flix. “We now see a huge op­por­tu­nity for CBS to go di­rect-to-con­sumer on a much big­ger scale world­wide.”

CBS’ sec­ond-quar­ter earn­ings blew past Wall Street’s ex­pec­ta­tions, with rev­enue up 9% to $3.3 bil­lion com­pared with the year-ear­lier pe­riod. For the Aprilthrough-June quar­ter, CBS earned 14 cents a share, or $58 mil­lion, com­pared with 93 cents, or $423 mil­lion, a year ear­lier.

The lower earn­ings re­flected a $365-mil­lion non­cash charge re­lated to the spinoff of its ra­dio sta­tions di­vi­sion to En­ter­com Com­mu­ni­ca­tions Corp.

On an ad­justed ba­sis, CBS pro­duced earn­ings of $1.04 a share, com­pared with an­a­lysts’ ex­pec­ta­tions of 98 cents, ac­cord­ing to Thom­son Reuters.

CBS’ shares closed Monday at $64.52, up 1.4%, or 90 cents — and climbed fur­ther in af­ter-hours trad­ing af­ter earn­ings were an­nounced.

The com­pany, con­trolled by Sum­ner Red­stone and his fam­ily, has been in­tent on suc­cess­fully mak­ing the tran­si­tion to dig­i­tal dis­tri­bu­tion. When CBS first launched CBS All Ac­cess nearly three years ago, skep­tics be­lieved that few cord­cut­ters and young view­ers would pay $5.99 a month for a tra­di­tional TV net­work.

But CBS’ stream­ing ser­vice, com­bined with a stand­alone stream­ing of­fer­ing for sis­ter chan­nel Show­time, should reach 4 mil­lion sub­scribers by year’s end, the com­pany said.

CBS All Ac­cess has a deep trove of con­tent. Rather than sell­ing its up­com­ing “Star Trek” spinoff to a stream­ing ser­vice like Net­flix or Ama­, the se­ries will be exclusive to CBS All Ac­cess as a way to drive new sub­scrip­tions.

CBS also has been ag­gres­sive in se­cur­ing stream­ing rights for sports prop­er­ties, in­clud­ing CBS’ five NFL “Thurs­day Night Foot­ball” games in the up­com­ing sea­son. As the com­pe­ti­tion for sports heats up, CBS said it would not be shy about bid­ding for sports rights.

Also Monday, CBS un­veiled a hard-fought agree­ment to li­cense its pro­gram­ming to AT&T’s stream­ing ser­vice, DirecTV Now. The Dal­las phone gi­ant had been strug­gling for nearly a year to ne­go­ti­ate a deal to in­clude CBS — in­clud­ing the lo­cal feed of KCBS-TV Chan­nel 2 — in the DirecTV Now stream­ing ser­vice, which launched late last year.

Terms of the pact were not dis­closed.

The deal with AT&T means CBS is now part of all the ma­jor stream­ing ser­vices that of­fer live tra­di­tional chan­nels, in­clud­ing Hulu and Google’s YouTube TV. CBS, how­ever, is not on Dish Net­work’s Sling TV. In ad­di­tion to live feeds for Chan­nel 2 and Chan­nel 9, DirecTV Now has rights to carry the CW net­work, co-owned by CBS, and the CBS Sports and Pop ca­ble chan­nels.

Drew An­gerer Getty Images

“WE ARE very aware of the in­ter­na­tional suc­cess that other stream­ing com­pa­nies have had,” CBS chief Les­lie Moonves said Monday. Above, Moonves in July.

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