CBS plans to go global with its All Access streaming service; earnings easily top forecasts

Venerable U.S. broadcaster CBS Corp. said it plans to expand its CBS All Access streaming service globally, beginning with Canada early next year.

CBS revealed its international ambitions Monday as part of an effort to further bolster its $5.99-a-month streaming service as a hedge against dramatic changes in viewer behavior.

“We are very aware of the international success that other streaming companies have had,” CBS Chief Executive Leslie Moonves told analysts Monday in a conference call, a reference to streaming giant Netflix. “We now see a huge opportunity for CBS to go direct-to-consumer on a much bigger scale worldwide.”

CBS’ second-quarter earnings blew past Wall Street’s expectations, with revenue up 9% to $3.3 billion compared with the year-earlier period. For the April-through-June quarter, CBS earned 14 cents a share, or $58 million, compared with 93 cents, or $423 million, a year earlier.

The lower earnings reflected a $365-million noncash charge related to the spinoff of its radio stations division to Entercom Communications Corp.

On an adjusted basis, CBS produced earnings of $1.04 a share, compared with analysts’ expectations of 98 cents, according to Thomson Reuters.

CBS’ shares closed Monday at $64.52, up 1.4%, or 90 cents — and climbed further in after-hours trading after earnings were announced.

The company, controlled by Sumner Redstone and his family, has been intent on successfully making the transition to digital distribution. When CBS first launched CBS All Access nearly three years ago, skeptics believed that few cord-cutters and young viewers would pay $5.99 a month for CBS — a traditional TV network that boasts one of the grayest audiences around.

But CBS’ streaming service, combined with a stand-alone streaming offering for sister channel Showtime, should reach 4 million subscribers by year’s end, the company said.

“We are not only capitalizing on the changes in our industry but we are also shaping the direction of these changes,” Moonves told analysts.

CBS All Access has a deep trove of content. Rather than selling its upcoming “Star Trek” spinoff to a streaming service like Netflix or Amazon.com, the series will be exclusive to CBS All Access as a way to drive new subscriptions. The premiere episode will play on the CBS television network but subsequent episodes will run on the streaming platform.

CBS also has been aggressive in securing streaming rights for sports properties, including CBS’ five NFL “Thursday Night Football” games in the upcoming season. As the competition for sports heats up, CBS said it would not be shy about bidding for sports rights. “This service could allow us to be a big player in that,” Moonves said.

Also Monday, CBS unveiled a hard-fought agreement to license its programming to AT&T’s streaming service, DirecTV Now. The Dallas phone giant had been struggling for nearly a year to negotiate a deal to include CBS — including the local feed of KCBS-TV Channel 2 — in the DirecTV Now streaming service, which launched late last year.

Although terms of the pact were not disclosed, CBS has been adamant that it would be paid top-dollar for its programming.

“You can’t be a new bundle without CBS — we are proving that to be the case,” Moonves said.

The deal with AT&T means that CBS is now part of all of the major streaming services that offer live traditional channels, including Hulu and Google’s YouTube TV. CBS, however, is not on Dish Network’s Sling TV. In addition to live feeds for Channel 2 and Channel 9, DirecTV Now has rights to carry the CW network, co-owned by CBS, and the CBS Sports and Pop cable channels. DirecTV Now subscribers also can pay more for CBS’ premium cable channel, Showtime.

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