CBS' Q1 net earnings up 494% year-over-year to US$202M on operating growth, strong ad revenue growth, non-advertising income, new NCAA agreement, CEO says; revenue down less than 1% to US$3.51B
May 4, 2011
– CBS Corporation (NYSE: CBS.A and CBS) today reported results for the first quarter ended March 31, 2011.
“CBS’s first quarter performance demonstrates the extraordinary momentum we have created in our businesses,” said Sumner Redstone, Executive Chairman, CBS Corporation. “Our industry-leading content and multi-platform distribution continue to provide a competitive advantage that fuels our ongoing success. Going forward, I am very confident that the strategies employed by our management team will propel us to even greater heights throughout the rest of the year and beyond.”
“Across the board, this was an exceptionally strong quarter for CBS, giving us a tremendous start in 2011,” said Leslie Moonves, President and Chief Executive Officer, CBS Corporation. “Our first quarter performance was driven by strong underlying advertising revenue growth and increases in non-advertising revenue streams, as we continue to maximize the value of CBS’s world-class content. In addition, the strategic actions taken to strengthen our business model, including CBS Television’s new NCAA agreement, have helped deliver yet another consecutive quarter of year-over-year margin expansion. We are particularly pleased with our substantial free cash flow generation, and we remain committed to returning a substantial portion of this cash to shareholders through the combination of share repurchases and dividends. Looking ahead, we have great momentum heading into this year’s Upfront marketplace, and we continue to enter into lucrative retransmission, syndication and online distribution deals. As we increasingly capitalize on these opportunities, we are confident that we will drive growth over the long term by focusing on our strategy to drive higher recurring revenue streams and diversify our businesses while delivering value to our shareholders.”
First Quarter 2011 Results
Revenues of $3.51 billion for the first quarter of 2011 decreased less than 1% from $3.53 billion for the same quarter last year, despite the benefit to 2010 from CBS Television Network’s broadcast of Super Bowl XLIV, as well as the new programming agreement for the NCAA Division I Men’s Basketball Championship (“NCAA Tournament”) which resulted in lower revenues, but higher profits for 2011. Taken together, these two noncomparable items lowered the first quarter 2011 revenue comparison by approximately 10 percentage points, as strong underlying advertising revenue growth and increased affiliate and subscription fees benefited the Company during the quarter.
Operating income before depreciation and amortization (“OIBDA”) of $576 million for the first quarter of 2011 increased 64% from adjusted OIBDA of $351 million for the same prior-year period, driven by significant growth and margin expansion in every business segment. The OIBDA margin of 16% for the first quarter of 2011 increased by six percentage points from last year’s first quarter adjusted OIBDA margin, driven by the aforementioned underlying revenue growth, the impact of the new programming agreement for the NCAA Tournament and the absence of the Super Bowl XLIV broadcast.
Operating income for the first quarter of 2011 more than doubled to $437 million from adjusted operating income of $210 million for the same quarter last year.
Net earnings were $202 million for the first quarter of 2011, or $.29 per diluted share, up from adjusted net earnings of $34 million, or $.05 per diluted share, for the same quarter last year due to the aforementioned OIBDA growth and a decrease to interest expense of $28 million, reflecting the benefit of the Company’s 2010 debt reduction activities.
Adjusted results for the first quarter of 2010 exclude restructuring charges of $57 million and $26 million of discrete tax items. For the first quarter of 2010, reported OIBDA was $294 million, operating income was $153 million and net loss was $26 million, or a loss of $.04 per diluted share. For the first quarter of 2011, there were no items that required results to be adjusted. Reconciliations of all non-GAAP measures to reported results are included at the end of this earnings release.
Free cash flow for the first quarter of 2011 increased 29% to $853 million from $660 million for the first quarter of 2010, principally reflecting higher OIBDA. This growth was achieved despite the benefit to free cash flow in 2010 from the Super Bowl XLIV broadcast on the CBS Television Network.
Balance Sheet and Liquidity
During the first quarter, the Company repurchased 11.8 million shares of CBS Corp. Class B Common Stock for $250 million under its $1.5 billion share repurchase program. Additionally, during the first quarter, the Company extended its $2.0 billion credit facility through March 2015, at better borrowing rates. At March 31, 2011, the Company’s cash balance was $972 million, debt outstanding was $5.99 billion and there were no credit facility borrowings.