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CBS posts record quarterly revenue with bullish 2016 outlook

It was a stellar first quarter for CBS Corp. after the broadcast company's executives reporteda historical high in revenue and EPS, driven by strong gains from Super Bowl 50.

The company's quarterly revenue jumped 10% year over year to$3.85 billion, the highest first-quarter revenue in the company's history, CBS Presidentand CEO Les Moonves said during the May 3 earnings call. Advertising revenue forthe quarter jumped to $2.34 billion from $1.78 billion in the 2015 first quarter,a 31% growth driven by the Super Bowl 50 broadcast and three additional NationalFootball League games. But even after factoring out the sports events, underlyingnetwork advertising saw a 12% growth, Moonves said. Affiliate and subscription feerevenue saw a 15% year-over-year increase, driven in part by revenues from new digitaldistribution platforms and growth in retransmission revenues and fees.

Moonves touted the success as a sign of the network's dominancein the market and the superiority of traditional broadcast advertising over digitaland cable advertising.

"So marketers are realizing once again that they get theirbest returns with broadcast television advertising," he told analysts. "Thisis a big part of why you are seeing the kind of results we are talking about today."

The company's first-quarter operating income increased 14% to$821 million from $721 million a year ago. On an adjusted basis, operating incomegrew 16% to $812 million from $702 million in the prior-year period.

For the first quarter, net earnings were $473 million, or $1.02per share, versus $394 million, or 78 cents per share, a year ago. The company postedadjusted net earnings of $474 million, or $1.02 per share, up from $391 million,or 77 cents per share, in the same prior-year period. The company said it was forthe first time in the company's history that EPS came in above a dollar.

The S&P Capital IQ consensus normalized EPS and GAAP EPSestimates for the first quarter were both 94 cents.

On the OTT front, the company is still putting a lot of weightbehind its CBS All Access and Showtime entries. The anticipated debut of a new "StarTrek" series in January on the CBS All Access product will bring substantialgrowth to the product. The network aims to add three to four original series eachyear to the OTT product, Moonves said.

By not selling "Star Trek" to other streaming services,Moonves said the network is emphasizing the priority CBS All Access has in the company.

"It's very important to us. And there are a lot of veryrabid Star Trek fans who are going to sign up for [CBS All Access]," he said."We will follow that up with additional original content and we continue toplay it that way."

Executives also touched on the planned spinoff of the company'sradio business, addingthat the company is moving forward with plans to file a registration statement sometime in June or July. But COO Joe Ianniello added that while a stand-alone companyis the best option for shareholders, the radio asset attracted several interestedparties.

"We think a stand-alone public company exit is the bestoption available. However, if there is a transaction that can maximize the after-taxvalue of this business in a shorter period of time with a higher degree of certainty,we will pursue that as well," he told analysts.

Turning to the skinny bundle movement, Ianniello remained optimisticabout the demand consumers will have for CBS programming. The network is in thelead for viewers in 25 to 54 age range, 18 to 49 age range and 18 to 34 age range,positioning it to be a part of any cord-cutting service. For any bundle to function,not having the No. 1 network would not help, Ianniello said.

Looking to the rest of the year, Moonves and Ianniello gave abullish outlook for the remainder of the 2016 year. With robust demand for scatteradvertising, the executives emphasized the network's ability to increasing pricingand volume that will yield results at the end of the 2016 and into 2017.

The momentum in the first quarter is expected to continue intothe rest of the year, driven by political advertising, retransmission growth andskinny bundle opportunities.

CBS stock was up more than 2% in after-hours trading on May 3.