CBS Corp. (CBS:US), owner of the most-watched television network, said first-quarter profit climbed 80 percent on sales of reruns and higher fees from pay TV systems.
Net income rose to $363 million, or 54 cents a share, from $202 million, or 29 cents, a year ago, New York-based CBS said today in a statement (CBS:US). Excluding items, profit was about 54 cents, exceeding the 44-cent average of 27 analysts’ estimates compiled (CBS:US) by Bloomberg.
CBS’s television network and stations are increasing revenue through fees cable systems pay to carry their signals. The fees almost doubled to $60 million in the period, Michael Morris, an analyst at Davenport & Co., wrote in a report today. The network is also collecting a larger share of the cable fees paid to its affiliate stations, he said.
“We see this as a significant ongoing growth opportunity that remains under appreciated in the current consensus estimates and market valuation,” wrote Morris, who recommends buying the shares.
Revenue climbed 12 percent to $3.92 billion, exceeding the $3.78 billion average of 24 analysts’ estimates. Results for the quarter included an after-tax $16 million gain from early retirement of debt and an after-tax impairment expense of $14 million, the company said.
Advertising sales increased 8 percent at the network. TV station revenue rose 2 percent while radio station revenue declined by the same percentage. Revenue from the outdoor billboard unit gained 1 percent.
Money from syndication, the sale of reruns to other broadcast and cable programmers, climbed 39 percent. In the period, CBS agreed to provide non-exclusive rights to “CSI: Miami” to AMC Networks Inc. (AMCX:US) for about $80 million, Morris estimated.
CBS, controlled by Chairman Sumner Redstone, rose 2.2 percent to $34.16 in extended trading. It gained 0.1 percent to $33.42 at the close of trading in New York and is the top performer of the past year in the 16-stock S&P 500 Media Index with a gain of 33 percent.
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