CBS Steps Up Its Digital Strategy as Viewing Habits Evolve -- WSJ

This article is being republished as part of our daily reproduction of articles that also appeared in the U.S. print edition of The Wall Street Journal (August 8, 2017).

CBS Corp. is ramping up its digital efforts by expanding its online streaming service "All Access" abroad and launching a new digital sports network later this year in the U.S.

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The aggressive expansion of its digital operations is the latest sign that growth for so-called traditional media companies such as CBS will lie in online platforms as viewing habits change.

"Clearly there is a lot of upside here," CBS Chief Executive Leslie Moonves said of the digital businesses, when he unveiled the latest plans during the company's earnings call Monday.

The benefit of its own streaming efforts as well as deals with other online skinny bundles started to play out in second-quarter results. For the quarter ending June 30, CBS reported higher-than-expected sales and earnings as the media company received a boost from college sports and streaming subscription services.

CBS All Access, which is a direct-to-consumer service available in the U.S. for $5.99 a month that includes a live feed of the network as well as library fare, will launch in Canada early next year and then in other, as yet undisclosed international markets.

CBS didn't say how many subscribers All Access has but said it and a similar direct-to-consumer streaming service for its premium cable channel Showtime are expected to pass four million subscribers, combined, this year.

Expanding CBS All Access abroad could make selling CBS shows overseas more complex. Currently, the company often cuts exclusive deals with programmers and streaming services. Netflix, for example, has the global distribution rights to a new "Star Trek" series that will debut on CBS All Access next month. Mr. Moonves said future international deals for CBS-owned shows will likely be done in a way that gives All Access the streaming rights.

Details on the new streaming sports service were sparse, as it is still in the early stages of development. Much of the focus will be opinion and news as well as highlights.

CBS already owns a cable sports channel called CBS Sports Network. It has some sports rights but not at the level of Walt Disney Co.'s ESPN or 21st Century Fox's Fox Sports unit.

Mr. Moonves said that the company would "look to differentiate ourselves from ESPN and Fox Sports" with the new sports service and that costs can be kept to a minimum because the infrastructure for the platform already exists.

The sports service is in part an effort to replicate CBS's success with its digital 24-7 news stream CBSN, which the company is now offering to over-the-top distributors as a stand-alone channel.

Long a hold out from DirecTV Now, CBS also said it has completed a deal for its programming to be carried by the AT&T-owned direct-to-consumer streaming service, which launched late last year. Besides CBS and Showtime, DirecTV Now will also have rights to distribute the entertainment channel Pop and The CW broadcast network, which is a joint-venture between CBS and Time Warner Inc.

CBS's net income for the second quarter fell to $58 million, or 14 cents a share, from $423 million, or 93 cents a share, a year earlier. The earnings included a noncash charge of $365 million related to the spinoff of its radio unit. Adjusted net earnings for the quarter were $1.04 a share.

Revenue jumped 9% to $3.26 billion.

Analysts polled by Thomson Reuters had forecast earnings of 98 cents on $3.09 billion in revenue.

Advertising revenue -- the largest contributor to CBS's top line -- grew 4.3% to $1.3 billion, led by the semifinals and finals of the NCAA Division I Men's Basketball Championship in April.

During the quarter, the media company restructured its advertising-sales unit to focus on capturing more revenue from digital platforms, including tapping a former high ranking Facebook executive to oversee those efforts.

Content licensing and distribution rose 12% in the quarter, driven by a higher volume of television licensing sales.

Affiliate and subscription fee revenues were up 16%, driven by a 25% increase in retransmission revenue and fees from CBS Television Network-affiliated stations.

Write to Joe Flint at and Imani Moise at

(END) Dow Jones Newswires

August 08, 2017 02:47 ET (06:47 GMT)