Affiliate and subscription revenue overtook advertising sales as the biggest money-maker for CBS Corp. in the most recent quarter as the broadcaster ramps up its streaming offerings.
Affiliate and subscription fees, which include revenue from streaming services and traditional bundles, jumped 52% in the period, helped by sales of the pay-per-view boxing match between Floyd Mayweather and Conor McGregor, as well as subscriber growth at the company's streaming services.
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Traditional media companies such as CBS have increasingly turned to online platforms for growth. CBS has laid out plans for international expansion of its direct-to-consumer platform CBS "All Access" -- which charges subscribers $5.99 for access to a live stream of the network and a library of shows. On a call with analysts Thursday, Chief Executive Leslie Moonves said the streaming service is also continuing to invest in original content, with plans to make a new version of the cult classic "The Twilight Zone" for All Access, as well as ordering a second season of "Star Trek: Discovery."
Analysts at Evercore Group LLC said CBS's streaming services have insulated the company from some of the impact of subscribers dropping their cable services. CBS has also benefited from offering its channels on virtual distributors such as Hulu Live.
"Newer digital platforms are resulting in more revenue per subscriber than traditional ones," Mr. Moonves said in a statement.
Advertising revenue fell 5% because of lower political spending than in the year-earlier quarter, which was during the presidential election. The most recent period also had one fewer Thursday Night Football game airing on the network than in the year-earlier quarter. Operating income fell 2% in part because of the decline in more-profitable political ads.
Mr. Moonves acknowledged that NFL ratings are "down a bit this year," and cited both the large amount of football available to fans and the controversy over some players using the National Anthem as platform to protest perceived racial injustice in the criminal justice system. "There's a lot out of product out there, there's no question about it," Mr. Moonves said.
CBS Sports Chairman Sean McManus said in a recent interview that the network's Sunday afternoon package has been "diluted" by additional games on Thursday and elsewhere. As for whether player protests are hurting advertising, Mr. Moonves said he doesn't know of any sponsors who have pulled commercials because of it.
Content licensing and distribution revenue fell 22%.
Overall, CBS reported mixed results in the third quarter. Earnings rose to $592 million, or $1.46 per share from $478 million, or $1.07 per share a year earlier. On an adjusted basis the company reported earnings of $1.11. Revenue rose 2.8% to $3.17 billion.
Analysts polled by Thomson Reuters had forecast earnings of $1.07 per share on $3.26 billion in revenue.
Shares fell 2% to $53.40 in after-hours trading, adding to the 3.1% drop logged during Thursday trading.
--Joe Flint contributed to this article.
Write to Imani Moise at email@example.com
(END) Dow Jones Newswires
November 02, 2017 18:09 ET (22:09 GMT)