WEBVTT - Ranganathan on CBS Earnings (Audio)

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<v Speaker 1>I can't always be fun. People are watching CBS. It

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<v Speaker 1>would appear, at least according to their earnings after the

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<v Speaker 1>bell four point three percent rise in uh second quarter

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<v Speaker 1>advertising sales. The stock right now after I was trading

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<v Speaker 1>about point four percent rise. To talk with us more,

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<v Speaker 1>to dig through those earnings, we have Gita Reaganathan, who

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<v Speaker 1>is our technology and media analysts at Bloomberg Intelligence. So

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<v Speaker 1>break this down for us. We have advertising sales rising

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<v Speaker 1>while the rest of the industry seeing a pretty uh

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<v Speaker 1>underwhelming or or dropping forecast. CBS bucking the trend here

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<v Speaker 1>or or something something else going on. Yeah, um, so

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<v Speaker 1>you know, as you mentioned, yes, media ad results so

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<v Speaker 1>far have been pretty uninspiring, and what's been more concerning

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<v Speaker 1>is that the outlook has been fairly deepd as well.

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<v Speaker 1>CBS seems to have bucked that trend on the surface,

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<v Speaker 1>but let's remember that they mainly got that advertising boost

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<v Speaker 1>from the broadcast of the n C Double A UM

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<v Speaker 1>Championship Games. They did not have that last year, so

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<v Speaker 1>that really gave them a little bit of a bump.

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<v Speaker 1>So it looks like on the surface of it, you know,

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<v Speaker 1>ad results look good, but then if you dig a

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<v Speaker 1>little deeper, um, you know, underlying trends still seem a

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<v Speaker 1>little disconcerting. On a core AD trends, uh look like

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<v Speaker 1>they were flat at best. So when when you look

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<v Speaker 1>at these numbers, what do you think they've got your

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<v Speaker 1>what you're basically saying, it's not a it's not a

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<v Speaker 1>simple compass, not year over year because they've got a

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<v Speaker 1>new business in there that's so profitable for them. Um,

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<v Speaker 1>why was that so much more profitable for them? And

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<v Speaker 1>they didn't have the game of course, but the expenses

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<v Speaker 1>stay about the same. That's it's gonna be pretty expensive

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<v Speaker 1>event to put on. Um. Right, So advertising trends, um,

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<v Speaker 1>you know, are they've they've they've clearly been what what

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<v Speaker 1>CBS has been doing is it's actually one of the

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<v Speaker 1>most exposed advertising, but they've kind of tried to really

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<v Speaker 1>diversify away from that, and in that process they've increased

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<v Speaker 1>their exposure to all of these other non ad revenue

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<v Speaker 1>streams which are very high margin. It's a great example

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<v Speaker 1>of that is you know, retransmission and then what they

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<v Speaker 1>have been really um, you know, touting, which has been

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<v Speaker 1>digital sales with you know, over the top services. And

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<v Speaker 1>if you look at those two line items, Um, you know,

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<v Speaker 1>the sales there have been or the sales increases have

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<v Speaker 1>been fairly spectacular. I mean they reported something like about

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<v Speaker 1>at eight percent increase in affiliate and re transmission fees

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<v Speaker 1>and really all of that coming from you know, their

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<v Speaker 1>normal negotiations with the pay TV operators as well as

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<v Speaker 1>with all of these new skinny bundles in you know,

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<v Speaker 1>YouTube and Hulu and whatnot. So they're just making sure

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<v Speaker 1>that they have great representation on all platforms and that

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<v Speaker 1>and that they're getting paid for it. So Showtime again,

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<v Speaker 1>so what they said today was, um, they expect to

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<v Speaker 1>actually cross over four million subscribers. Then that's combined on

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<v Speaker 1>both their Showtime and their CBS All Access O t

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<v Speaker 1>T platforms at the end of the year. A big

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<v Speaker 1>contributor to Showtime has been you know, the telecast of

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<v Speaker 1>twin Peaks. Um, and with All Access, they really are

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<v Speaker 1>hoping to get a boost with the Star Trek that

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<v Speaker 1>that that's going to be exclusive on the online platform

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<v Speaker 1>sometime in September as well as they're also offering you know,

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<v Speaker 1>NFL content on their All Access platforms. So, um, you know,

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<v Speaker 1>definitely the momentum in the digital part of the business

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<v Speaker 1>seems to be fairly good. Um. The other the other

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<v Speaker 1>big announcement from them was that they're actually trying to

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<v Speaker 1>take this all access Um content global, So their first

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<v Speaker 1>move is going to be into Canada. That they seem

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<v Speaker 1>to be like almost following a Netflix type of you know,

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<v Speaker 1>playbook here, um, taking it there first, kind of seeing

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<v Speaker 1>how it goes, and then expanding it to more territory

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<v Speaker 1>across the globe. I haven't seen have you seen? I

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<v Speaker 1>haven't seen the numerous yet on that hue that I

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<v Speaker 1>actually have not What sounds like we all got to

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<v Speaker 1>get on the board. We can get someone else, markt

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<v Speaker 1>you finish the radio shows so we can go watch

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<v Speaker 1>twin peaks sumbs up. Uh, well, so speaking of so

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<v Speaker 1>you said gains a lot from the n C Double

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<v Speaker 1>A Finals. So looking at the headlines coming out of

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<v Speaker 1>Less Moon, visus call and he said, CBS is rolling

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<v Speaker 1>out of seven live streaming sports channel. That seems like

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<v Speaker 1>an interesting tactic. I mean, kind of rubbing up there

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<v Speaker 1>against ESPN, who is having its troubles of its own.

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<v Speaker 1>I mean, how big of a part are our live

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<v Speaker 1>sports for CBS. In other words, if we were to

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<v Speaker 1>take that away, Uh, could c CBS still succeed with

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<v Speaker 1>all these other different ventures it's going into. I mean,

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<v Speaker 1>I mean, live sports is a big part of the

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<v Speaker 1>equation for CBS. So you know, they have their NFL

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<v Speaker 1>deal going up onto two. UM, they've blocked in that

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<v Speaker 1>that deal and they and they've you know, they've they've

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<v Speaker 1>really tried to expand our coverage as much as possible.

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<v Speaker 1>So you know, they have the Thursday night games and whatnot.

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<v Speaker 1>UM and UM, you know, so live sports is big.

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<v Speaker 1>That's been a big feature of their UM, you know,

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<v Speaker 1>retransmission deals. UM, that's been a big selling point for

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<v Speaker 1>them with they're all access UM and so UM, you know,

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<v Speaker 1>with the with the streaming, they've also made great strides,

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<v Speaker 1>I would say, UM, and I think the industry generally

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<v Speaker 1>agrees that they've made pretty great strides very quickly in

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<v Speaker 1>terms of streaming UM. And so this this life sports

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<v Speaker 1>only goes to further strength and that and if they're

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<v Speaker 1>able to you know, um succeed, I mean that that

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<v Speaker 1>only shows how um, you know, how fast they've been

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<v Speaker 1>able to get onto this whole UM digital bundle in

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<v Speaker 1>in a in a rapidly changing landscape. When I look

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<v Speaker 1>at content licensing as for senator revenues and just doing

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<v Speaker 1>a quick back namble the math, but it looks like

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<v Speaker 1>it's gone from about thirty revenues a year ago to

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<v Speaker 1>thirty three revenues. But the trend seems to be indicative

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<v Speaker 1>of something. What am I seeing there? I mean is

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<v Speaker 1>that is that again about better negotiations without one picking

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<v Speaker 1>up their their local affiliates. Yes, exactly, core Um. So

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<v Speaker 1>it's one thing is they're they're owning more and more

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<v Speaker 1>of their content. So if you just heard less moon

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<v Speaker 1>Bis right now on the call, he said of their

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<v Speaker 1>prime time schedule in the fall is actually from their

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<v Speaker 1>from their studio, from the CBS studios. And when they

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<v Speaker 1>do that, when they own more and more of their content,

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<v Speaker 1>what that means is that they're able to go out

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<v Speaker 1>into the domestic marketplace, into the international marketplace and license

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<v Speaker 1>out that revenue. So that's kind of been um their model.

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<v Speaker 1>Um They've they've they're really relying more um Um in

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<v Speaker 1>home for you know, their sister and a sister studio

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<v Speaker 1>for for all of the shows, and that's kind of

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<v Speaker 1>really bumping up that content licensing revenue. They're owning more

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<v Speaker 1>and more of their schedule guitar just real quick. Do

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<v Speaker 1>you think we're going to see CBS via commerce talk

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<v Speaker 1>start against soon? I think so? I think so. Um.

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<v Speaker 1>I mean we know that Viacom was going after a

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<v Speaker 1>script in a pretty big way, but they lost out

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<v Speaker 1>to Discovery. UM. I mean the media is else on

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<v Speaker 1>the whole, are you know not not in a great place.

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<v Speaker 1>So I think it's going to be incumbent on these

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<v Speaker 1>smaller cable network operators, especially like a Viacom, like an

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<v Speaker 1>AMC to go outner um. And I think the red

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<v Speaker 1>Stone family is going to go ahead and once again

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<v Speaker 1>push for this merger. Wow, the old murders never seemed

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<v Speaker 1>to die. That seems to be the theme of the

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<v Speaker 1>day was Sprints, Team Home or five. I'm CBS. Why

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<v Speaker 1>not ke So great to have you as always, Keet

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<v Speaker 1>Rocking Athen Bloomber Intelligence tech and media analysts on CBS

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<v Speaker 1>This Bloomberg