CBS' Moonves disses Aereo as 1Q earns top views
CBS Corp. Chief Executive Les Moonves gave an upbeat view of the health of broadcast TV Wednesday as the company reported strong results for the first three months of the year. He also dismissed startup Aereo as an "insignificant player" that was stealing CBS' signal.
Moonves told investors that Aereo has "gotten way too much attention" from the news media. The New York-based company takes broadcast signals for free from the airwaves and charges customers to watch them over computers and mobile devices. That threatens CBS' ability to collect fees from traditional service providers such as cable TV for rights to redistribute its stations' signals.
"We're not losing sleep over it. It is an insignificant player that has a couple thousand (subscribers)," Moonves said on a conference call. "We think ultimately that it goes away."
Broadcasters such as CBS have sued Aereo for copyright infringement, but so far Aereo has managed to keep operating thanks to a preliminary ruling in its favor last month. The company captures signals using thousands of tiny antennas, which it argues is comparable to individuals buying digital antennas for themselves.
Moonves echoed the comments of News Corp. Chief Operating Officer Chase Carey, who said last month that if Aereo gets a legal OK to keep operating, he would consider changing the Fox network to a channel available only through cable and satellite TV services.
Moonves said that making this switch at CBS would be "fairly easy to do" and not that disruptive because 85 percent of people who watch CBS do so through TV providers such as cable and satellite companies. But he added, "I'm very doubtful that happens."
Moonves' comments came as CBS, the maker of shows such as "NCIS: Los Angeles" and "The Good Wife," reported that first-quarter earnings rose 22 percent to $443 million, or 69 cents per share. Excluding a loss from the outdoor billboard business in Europe and Asia, which CBS expects to sell this year, adjusted earnings came to 73 cents per share, 5 cents better than the 68 cents predicted by analysts polled by FactSet.
Revenue rose 6 percent to $4.04 billion, the highest since the company's 2006 split from Viacom Inc. That topped the $4.02 billion expected by analysts.
Advertising revenue grew 8 percent to $2.46 billion, helped by big events such as the Super Bowl and Grammy awards. Excluding these one-time events, the company said ad revenue would have grown in the "low single digit" percentages.
CBS Corp.'s stock rose 50 cents, or 1.1 percent, in after-hours trading to $46.90.
Moonves said that demand for last-minute ad buys on the CBS network was strong. He predicted that both bulk airtime sales and prices would be "up considerably" during the mass sales period ongoing now called the "upfronts." Such price hikes would boost CBS's finances in the final quarter of the year. He said prices would be up in the "high single to low double digit" percentages from a year ago.
Alan Gould, an analyst with investment bank Evercore Partners, said Moonves' comments were reassuring. Gould said the quarterly results were much better than expected.
"I do believe him that CBS will do better than the rest of the industry," he said.
Earlier Wednesday, NBC and Telemundo owner Comcast Corp. said broadcast television revenue fell more than 18 percent to $1.5 billion because the quarter last year included the Super Bowl on NBC. Excluding the Super Bowl, which was on CBS this year, revenue fell 5 percent. Comcast blamed lower prime-time ratings at NBC and lower revenue from content licensing.
ABC and ESPN owner Walt Disney Co. and Fox owner News Corp. are scheduled to report results next week.