Super Bowl LIII, Tax Credit Help CBS Offset Growing OTT Video Content Costs

Advertising revenue from February’s Super Bowl LIII broadcast and a tax benefit contributed to CBS Corp. May 2 reporting a 140% increase in first-quarter (ended March 31) net income to $1.58 billion, compared with $511 million in net income the previous-year period. Revenue increased 11% to $4.17 billion, from $3.76 billion for the prior-year period.

CBS said it received a “discrete” tax benefit of $768 million from the  reorganization of the company’s international operations.

The company said direct-to-consumer video subs, which include CBS All Access and Showtime OTT, grew 71% to 9 million combined subscribers, from 5.3 million in 2018.

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“We are seeing strong growth here in the second quarter thanks to premium original series such as ‘The Twilight Zone’ on CBS All Access and ‘Billions’ on Showtime OTT,” acting CEO Joseph Ianniello said in a statement. “At the same time, we also continue to produce more and more content for a variety of buyers, including Amazon, Apple and Netflix, which will debut ‘Dead to Me’ from CBS Television Studios tomorrow.”

Increased content production for Showtime OTT contributed to the cable networks business unit (which includes Showtime OTT) reporting a 26% drop in operating income to $175 million from $236 million last year. Revenue dipped 3% to $552 million from $571 million last year.

The entertainment unit, which includes CBS All Access, CBSN and other streaming services, reported a 9% increase in operating income to $530 million from $486 million for the same prior-year period. Revenue increased 15% to $3.18 billion from $2.75 billion.

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