March 29, 2024

Media Decoder Blog: The Breakfast Meeting: CBS Sets Earnings Record, and Publishing Merger Gets O.K.

The CBS Corporation set records in the fourth quarter for operating income and adjusted operating income but still fell short of some analysts’ expectations, leading to a decline in its share price in after-hours trading, Bill Carter writes. The adjusted net earnings of $414 million produced earnings of 64 cents a share, also a quarterly record for CBS. The company announced an additional stock buyback of $1 billion, bringing the amount of stock it has committed to repurchasing this year to $2.2 billion. CBS, which is still the most-watched network on television, attributed the gains to a jump in advertising revenue in the last quarter, probably because of election commercials. Simon Schuster, CBS’s publishing unit, remained a troubling area with revenue declining to $215 million from $229 million in 2011.

The Justice Department has approved the merger of Random House and Penguin, which would create the largest book publisher in the world, Eric Pfanner writes. The Justice Department imposed no conditions on Bertelsmann, which owns Random House, or Pearson, the parent of Penguin, but the merger still faces regulatory reviews, most notably by the European Commission. Bertelsmann and Pearson announced their plans to merge the two publishers into a single entity that would have about a quarter of the English-language book market — no money would change hands in the agreement, but Bertelsmann is set to control 53 percent of the new company. Executives say the increased scale will give the publishers greater heft when negotiating e-book deals with the likes of Amazon, Apple and Google and help them develop new digital publishing models.

Print assets have become so toxic that media companies are quarantining them, David Carr writes on the Media Decoder blog. The latest example is Time Warner, which announced Wednesday that it might spin off a large portion of Time Inc., the largest magazine publisher in the country, into a new company with Meredith Publishing. Time Warner is following in the footsteps of News Corporation, whose stock hit a five-year high when the company announced a split between its entertainment and print divisions. Print publishing has lost a lot of significance with advertisers and consumers in the digital age, but investors have a far deeper hostility to the industry. The other two Manhattan magazine giants, Hearst and Condé Nast, are privately held and can afford to play for the long haul; Time Inc. does not have that luxury. Even though the media industry has been in a state of disruption for years, it sometimes takes a signature moment to drive the point home. Time Inc. being pushed out the door like a wayward party guest is a stark reminder of how the game has changed.

Wisk has started a new version of its venerable “ring around the collar” campaign, only this time it is aiming at invisible stains. In a series of online-only videos, a “documentarian” declares a “state of detergency” and confronts consumers at gyms and laundromats with an ultraviolet light, Andrew Adam Newman explains. He holds the light up to clean-looking clothing to show invisible stains, often in the armpits, and asks, “It’s the visible stains that you have to worry about; what about the stains you can’t see?” The videos will start on Tuesday on Web sites like The Huffington Post and NYTimes.com. Laundry detergent formulations have improved so much that many consumers no longer choose specific brands. “There is so little differentiation in the category that you have to step above stains in order to break through,” Lora Van Velsor, Wisk’s director of marketing, said.

The Committee to Protect Journalists reported a rise in the number of journalists killed or imprisoned around the world in 2012, citing government restriction of dissent, draconian laws and outright impunity for the murderers of journalists, Rick Gladstone reports. The committee’s annual Attacks on the Press survey showed that 70 journalists had been killed while doing their jobs in 2012, 43 percent more than in the previous year, and that more than 35 journalists had disappeared. The group said it had identified more than 232 journalists imprisoned in 2012, the most since the survey began in 1990.

Rhythm and Hues, the visual effects supplier behind films like “The Life of Pi,” has filed for protection under Chapter 11 of the United States Bankruptcy Code. The principal filing shows that the company’s main customers — 20th Century Fox, Universal Studios and Warner Brothers — have split in their approach to the company’s financial difficulties, Michael Cieply explains. Fox and Universal agreed to extend credit that will allow the company to continue working on their films, but Warner has demanded “the return of all materials” related to three of its scheduled movies. According to the filings, Warner claims it is owed $4.9 million, which it paid for work that has not been completed. The bankruptcy of Rhythm and Hues, one of the world’s “top eight” visual effects companies according to one of their filings, compounds the financial troubles of the effects industry, which has been impacted by global competition.

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/15/the-breakfast-meeting-cbs-sets-earnings-record-and-publishing-merger-gets-o-k/?partner=rss&emc=rss

Advertising: A Sellout for Super Bowl Commercial Time

CBS, which will broadcast the Super Bowl on Feb. 3, said on Tuesday that it had sold all the available commercial time — unless a marketer wants so much to be included that money is no object.

“Yes, we are sold out,” Leslie Moonves, chairman and chief executive of the CBS Corporation, said with a grin, “but if one of those movie companies wants to come in and pay five or six million, we will find room.”

Mr. Moonves was referring to the penchant for movie studios to wait somewhat longer than other marketers to decide whether to buy Super Bowl commercials.

As for the fanciful price tag in his jest, it would well exceed the highest rates for which CBS has made deals; “we have sold some of our spots for over $4 million,” Mr. Moonves said.

CBS has sold most of its Super Bowl spots, according to estimates by agency executives, for an average of $3.7 million to $3.8 million for each 30 seconds.

(By comparison, the average for Super Bowl XLVI, broadcast by NBC on Feb. 5, 2012, was $3.5 million.)

Usually there are 60 to 70 half-minute ad slots during each game, plus promotional spots for the network carrying the game. Mr. Moonves said the network hopes to include a promotion for “Late Show With David Letterman,” as it did, with hilarious effect, in 2007 and 2010.

Mr. Moonves spoke at an event at the CBS Broadcast Center on the West Side of Manhattan that was billed as Super Bowl XLVII Media Day. It was meant to serve as a showcase for what Mr. Moonves called “probably the biggest day of the year for this entire corporation.”

Commercials during the Super Bowl are traditionally the most expensive of the year because the game is typically the most-watched program of the year. The game is “a national holiday,” Mr. Moonves said.

The average viewership for the game last year set a record, at 111.3 million people.

It was the third year in a row that a Super Bowl set a ratings record, driven, many on Madison Avenue believe, by social media like Facebook and Twitter, which encourage people to watch the game live so they can discuss it, and the ads, with friends and family.

The high price of national Super Bowl spots also applies to commercials on local stations owned by or affiliated with the network broadcasting the game.

Some 30-second commercials in the game on WCBS-TV in New York, owned by CBS, have been sold for over $1 million, Mr. Moonves said.

Mr. Moonves, and the CBS advertising sales executives at the event, declined to name the sponsors, locally or nationally. That is common practice; network executives usually leave it to the buyers to decide if they want to identify themselves.

It was once standard procedure for advertisers to stay mum until just before the game — or even until the game ended — in hopes of capitalizing on the element of surprise to generate coverage.

But the increasing interest among consumers in sharing information about Super Bowl ads in social media is encouraging sponsors to describe their Super Bowl plans earlier.

For instance, on Tuesday the Paramount Pictures division of Viacom said it would run a commercial for a coming film, “Star Trek Into Darkness,” during the second quarter of the game. Viewers who before the game download an app — from Paramount and the Qualcomm Labs unit of Qualcomm — will be able to unlock special content during the commercial and be entered into a sweepstakes.

Other filmmakers likely to run commercials during Super Bowl XLVII include the Walt Disney Company and the Universal division of NBCUniversal, part of Comcast.

Also on Tuesday, the Anheuser-Busch unit of Anheuser-Busch InBev said it would run one or two commercials during the game for a new beer, Budweiser Black Crown. Anheuser-Busch, the exclusive beer sponsor of the Super Bowl, may also run commercials for brands like Bud Light and Budweiser.

Other marketers that have announced Super Bowl sponsorships in the last month include Mars, for MM’s; the Paramount Farms unit of Roll Global, for Wonderful pistachios; Skechers; Toyota Motor Sales USA, for its Toyota brand; and Unilever, for Axe personal-care products.

Marketers that had previously disclosed Super Bowl participation include, in addition to Anheuser-Busch, Best Buy;
Cars.com; the Coca-Cola Company; Ford Motor, for Lincoln; Gildan apparel, sold by Gildan Activewear; GoDaddy; two brands owned by the Hyundai Group of South Korea, Hyundai and Kia; Mercedes-Benz; Oreo, sold by Mondelez International; PepsiCo, for brands like Doritos, Pepsi-Cola and Pepsi Next; Realogy, for Century 21; Samsung; Soda-
Stream International
; and two brands sold by Volkswagen of America, Audi and Volkswagen.

That is not all. At least two more marketers plan to announce this week that they have bought Super Bowl ad time.

One is the Taco Bell division of Yum Brands, which last appeared in the game in 2010. The commercial is being created by Deutsch L.A., which recently joined the Taco Bell agency roster along with its lead agency, the Irvine, Calif., office of DraftFCB; both are part of the Interpublic Group of Companies.

Article source: http://www.nytimes.com/2013/01/09/business/media/a-sellout-for-super-bowl-commercial-time.html?partner=rss&emc=rss

CBS Reports Quarterly Profit More Than Doubled to $395 Million

The company, which owns the CBS broadcast network and the Showtime premium cable network among other assets, posted net income of $395 million in the quarter, up from $150 million in the same quarter last year.

Analysts predict that the strong showing by CBS is likely to be repeated by the other major media companies that will report second-quarter earnings this week and next.

Reassuring investors who have wondered about the strength of the advertising sector at a sour time for the broader economy, Leslie Moonves, the chief executive of CBS Corporation, said there was no comparing the mood of the marketplace now with the period in 2008 when advertisers retreated as the recession sank in.

“We’re not seeing anything like that — like we felt three years ago,” he said, answering an analyst’s question on a conference call Tuesday afternoon.

Describing increased demand for advertising time on CBS shows, Mr. Moonves said the recent end to the NFL lockout was a “big shot in the arm to us and to our advertisers.” CBS begins televising football games late in the third quarter of each year.

Historically, CBS has been the most dependent on advertising revenue of the major media companies. On Tuesday, Mr. Moonves emphasized how the company was “derisking its business model” by diversifying revenue sources. Total revenue for the quarter was $3.59 billion, up from $3.33 billion a year ago.

“CBS is a fundamentally different company today than we were just a few years ago,” he said, referring to the changing mix of revenue.

For the quarter, advertising revenue — still the biggest piece of revenue by far — grew 3 percent to $2.2 billion, while content licensing and distribution revenue grew 21 percent to $889 million. Mr. Moonves said Netflix’s licensing of old CBS shows like “Star Trek” and “Cheers” this year had contributed to the gains.

Last month, the two companies agreed to extend that arrangement to Canada and Latin America, but that was not reflected in the earnings, nor was Amazon’s licensing of old CBS shows, which was announced last week.

Benjamin Swinburne and Micah Nance of Morgan Stanley said Tuesday in a report that the two recent deals “highlight the continued opportunity for content owners to monetize current and library TV inventories.”

Affiliate and subscription fees, another center of growth for CBS and other media companies in recent years, grew 12 percent to $426 million for the quarter. The one segment of CBS to post a decline was publishing, which was down 3 percent to $183 million. CBS said that what it characterized as “strong growth in the sale of more profitable digital content” was offset by lower sales in print.

CBS shares fell 3.7 percent on Tuesday to close at $26.28.

Notably, CBS’s local television and radio stations posted a 2 percent increase in revenue for the quarter over a year ago, even though even-numbered years like 2010, when there is an influx of political spending, typically outperform odd-numbered years.

The increase also occurred despite what Mr. Moonves called a “temporary slowdown in Japanese auto spending” because of the earthquake and tsunami in March. As that spending returns, he said, “we feel very good about this category going forward.”

Article source: http://feeds.nytimes.com/click.phdo?i=651129111a1b0885bff2f4c322d4d6ce