CBS Profit Falls as Spending on Streaming Video Ramps Up

(Bloomberg) -- CBS Corp. reported lower profit as the company invests more in original programming for its streaming services, including a new deal for the Champions League soccer tournament.

In its final report before merging with Viacom Inc., CBS reported third-quarter earnings of 95 cents a share, a decline from a year earlier but slightly above the 92 cents a share analysts expected. Sales grew -- but fell short of forecasts.

The coming ViacomCBS has pinned its future on the growth of online video services, including CBS All Access and Showtime. The company has forecast those two services will surpass 25 million subscribers by 2022, offsetting the shrinking customer base for more-traditional cable- and satellite-TV packages.

CBS is increasing its investment in programming to drive subscriptions, suppressing profit in the short term. To that end, CBS acquired the U.S. rights to three seasons of the UEFA Champions League, a soccer tournament featuring the best clubs in Europe. CBS will carry more than 400 matches across nine months on All Access each year, and air the biggest games on its flagship broadcast network.

“We will now have exclusive live marquee sports for the first time,” Chief Executive Officer Joe Ianniello said Tuesday.

Ianniello will oversee many of CBS’s assets at the combined company as one of several senior leaders from CBS sticking around. The parties expect the deal to close in the next few weeks, and they have already announced much of the executive structure.

CBS’s advertising sales fell despite a boost in viewers for the National Football League. Viewership of CBS’s NFL games grew 6% across the first nine weeks of the season. Prime-time audiences have shrunk by 14% from last year.

Shares fell as much as 4.8% in New York trading. The stock was down 10% this year through Monday’s close.

To contact the reporter on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III, Mark Schoifet

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