'Dome' Deal in New Light? CBS Corp. Streaming Fees Fell in Fourth Quarter

CBS Profit Misses Estimates as Streaming Revenue Slumps

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'The Big Bang Theory' on CBS, one of TV's biggest hits
'The Big Bang Theory' on CBS, one of TV's biggest hits Credit: CBS

CBS Corp., owner of the most-watched U.S. television network, posted fourth-quarter results on Thursday that missed analysts' estimates as online licensing fees declined.

Net income increased 6.2% to $393 million, or 60 cents a share, from $370 million, or 55 cents, a year ago, CBS said in a statement. Profit excluding one-time items was 64 cents per share -- below the 69-cent average of 27 analysts' estimates.

The fourth quarter a year earlier benefited from the company's initial streaming sale of CW content, the company said. CBS and Warner Bros., which co-own The CW, struck a deal in October 2011 to provide Hulu and Hulu Plus with the network's shows not long after their air on TV.

CBS has otherwise provide reluctant to make current seasons of TV shows available through services such as Hulu, Netflix or Amazon Prime, calculating that doing so could undermine demand for traditional TV. This week, however, it made an exception for the summer miniseries "Under the Dome," which will appear on Amazon Prime four days after each episode runs on CBS.

The move seems to make more sense for "Under the Dome" than it would for, say, "The Big Bang Theory," because a miniseries doesn't afford the same opportunities for lucrative syndication runs or even traditional reruns. But the latest results are also a reminder the investors expect to see growth in the company's various revenue streams, including, however recently, streaming rights.

"People say, gee this is a new kind of deal for you," CEO Les Moonves said of the "Dome" pact during a conference call to discuss the fourth-quarter results. "And it absolutely is. And frankly, to put on that kind of quality programming in the summer, we needed to do an exclusive deal with Amazon on a deal that takes place only four days after airing. So it's a brand new model for us."

"The deals we're making today are deals we may not have made two years ago, now that we know a lot more about the marketplace," he added. "Obviously, to renew an Amazon deal is very productive. We're obviously still doing deals with Netflix all the time. Intel, we're obviously in conversations with, as they are with all content suppliers. The good news, Hulu continues to knock on our door, and should I say, Hulu Plus more specifically. The good news about us, and we've said this over and over again, we have the library and the current content that everybody wants. So our job is just to make the right deals, and I think we are."

Intel recently confirmed that it is working on assembling a streaming video service of its own.

CBS Corp.'s fourth-quarter decline in streaming revenue from the quarter a year earlier was countered by higher advertising and retransmission revenue, according to the company. Record advertising during the 2012 political campaigns lifted results at TV and radio stations.

Revenue increased 2.4% to $3.7 billion from $3.61 billion a year earlier, missing the $3.85 billion average of analysts' estimates.

The company announced plans in January to convert its outdoor advertising unit into a real estate investment trust and seek a buyer for the European and Asian parts of that business.

~ Bloomberg News and Ad Age staff ~

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