CBS overcomes ad slump with gains in show sales

CBS Corp, owner of the most-watched TV network in the US, has come up with a solution to investor concerns about the future of the TV business: make more shows like Star Trek: Discovery.

The media company has doubled the number of programmes it produces in recent years, creating shows for its own TV channels and streaming services, and others for tech giants Netflix Inc, Amazon. com Inc and Apple Inc.

CBS reported record fourth-quarter sales and earnings on Thursday, thanks to a 33% boost in programme licensing and a 20% increase in subscription fees, according to a statement.

“We have the biggest hits and many of the most valuable programming franchises in the business,” chief executive Leslie Moonves said on a call with analysts. “We are just beginning to benefit from our strategy to dramatically increase the output at our in-house studios.”

CBS has overcome a slump in TV advertising, and predicts high single-digit growth in sales this year, far more than Wall Street forecasts.

Moonves is trying to sustain the momentum at the company he has led for more than a decade while his board explores a merger with Viacom Inc, which like CBS is controlled by the Redstone family.

Viacom owns cable networks including MTV and Nickelodeon, as well as the Paramount Pictures studio.

Moonves opposed the deal in 2016 but has been urged to reconsider by Shari Redstone, who is vice chairman of both companies. Executives declined to discuss the potential merger during Thursday’s call with analysts.

To keep growing, CBS has invested in its own online services, including a version of its flagship network called All Access, and Showtime.

Those two paid streaming services have reached almost five million subscribers, the company said.

Moonves said on the call that CBS planned to introduce All Access in Canada in June. The company also offers an online news service for free, and will introduce a sports service in the coming weeks.

While media companies like Walt Disney Co are clawing back their shows and movies from streaming companies for use by their own services, CBS is trying to have it both ways.

Star Trek: Discovery, the first new series in the science-fiction franchise in more than a decade, streams on CBS’ All Access in the United States and on Netflix everywhere else.

Moonves said CBS would likely orchestrate a similar deal for a reboot of The Twilight Zone, which is being produced by rising star Jordan Peele. “My guess is we’ll make a huge international sale.”

Fourth-quarter earnings at CBS, excluding some items, rose to $1.15 a share, according to the statement, beating the $1.11 average of analysts’ estimates. Revenue grew 11% to $3.92 billion, compared with projections of $3.71 billion.

CBS rose as much as 3.5% to $58.70 in extended trading. The stock added 1.6% to $56.74 at the close in New York on Thursday and is down 3.8% in 2018.

In the past few years, CBS has sold its radio and billboard businesses to focus on television, while repurchasing billions of dollars of its shares.

The company also owns Simon & Schuster publishing.