Paramount Global

Good day, ladies and gentlemen, and welcome to today's CBS Corporation second quarter 2019 earnings call. Today's conference is being recorded, and at this time, I'd like to turn things over to Executive Vice President of Investor Relations, Mr. Anthony DiClemente.

Good afternoon, everyone, and welcome to our second quarter 2019 earnings call. Joining us with today's remarks are Joe Ionello, our President and Acting CEO, Joanne Ross, our Chief Advertising Revenue Officer, and Chris Spade, our Chief Financial Officer. Following Joe, Joanne, and Chris's remarks, we will open the call up to questions. Please note that during today's conference call, results will be discussed on an adjusted basis unless otherwise specified. Reconciliations for non-GAAP financial information related to this call can be found in our earnings release or on our website. Also note that statements on this conference call relating to matters which are not historical facts are forward-looking statements which involve risks and uncertainties that could cause actual results to differ. Risks and uncertainties are disclosed in CBS Corporation's SEC filings. A webcast of this call and the earnings release related to today's presentation can also be found on the investor relations section of our website at cbscorporation.com. Before we begin, I want to note that the purpose of today's call is to discuss our second quarter operational and financial results, and we will not be commenting on speculation regarding M&A. And with that, I'll turn the call over to Joe.

Thank you, Anthony, and good afternoon, everyone. Today, I'm going to give you an overview of our strong quarterly performance and touch on the key highlights across our operations. Then, as Anthony just mentioned, you'll hear from Joanne Ross, our Chief Advertising Revenue Officer. Joanne will talk about the state of the advertising marketplace and give you some color about our most recent upfront. And then Chris will give you more details about our financial results. As you saw in our release, CBS delivered double-digit revenue growth during the second quarter, with solid increases across all three key revenue types. Advertising was up 7% with strong underlying network performance. Content licensing was up 12%, driven by sales from our domestic libraries. and affiliate and subscription fees were up 13% fueled by growth in retrans and reverse comp, as well as increases in our direct-to-consumer streaming services, CBS All Access, and Showtime. And on a year-to-date basis, our growth story is just as strong. These revenue increases are driven by our investment in premium content, which we continue to accelerate. Every decision we make is designed to build upon our position as a global multi-platform premium content company. CBS is now producing 89 shows, up from 70 shows just a year ago. That's a 27% increase. As we create more and more content, we are monetizing its value using a two-pronged approach. The first approach is to produce more shows for our own platforms particularly our direct-to-consumer services. This investment helped drive a 75% increase in total OTT subs from last year's second quarter, representing an acceleration over the sub growth we posted in Q1. And the second approach we are using to monetize the value of our content is to take advantage of an increasingly lucrative licensing marketplace. CBS has become one of the most prolific content producers in the business, with series like Dead to Me, one of the top shows on Netflix, the much buzzed about VH90210, which just premiered on Fox last night, and a new version of Kids Say the Darnedest Things, which we're producing for ABC. So, by increasing the amount of programming we're creating for our own content brands, while also selling our shows to third parties, We are operating at a sweet spot in the industry and setting ourselves up for continued long-term growth. Now, let me tell you how that content is fueling our success across our businesses, starting with the biggest platform in media, the CBS television network, which last month received 44 Emmy nominations, 10 more than a year ago. And as you'll hear from Joanne, CBS has a long track record as the most watched network in America. We have 16 strong and established hits returning this fall, and we will use this stability to launch five new series that we will be premiering on just two nights. This means we can be very efficient in our marketing approach. In addition, we will have ownership in more than 85% of our fall lineup, which is more than we owned last year. And our studio is already developing promising new shows for CBS's 2020 broadcast season as well. Turning to sports, we're just a month away from the return of the NFL. As usual, Sean McManus and his team have worked closely with the league to construct a schedule that we feel very good about, including a rematch of last year's overtime AFC championship game between the New England Patriots and the Kansas City Chiefs. and we are already planning for our next Super Bowl, which will be airing on CBS again in just 18 months. Meanwhile, Susan Zurinsky has welcomed in a new day at CBS News. Quality broadcast journalism is the surest way to success, and we feel very good about the road ahead as Susan and her team continue to make that happen on a daily basis. Just as importantly, Susan and CBS Interactive continue to collaborate to grow CBSN, which is now averaging more than 1 million streams per day, and where our average viewer's median age is just 37 years old. Speaking of digital, CBS All Access continues to grow quickly by becoming a very compelling consumer proposition. It offers all our premium content in news, sports, and entertainment, an expanding slate of original series, live local television, catch-up viewing, and a broad 12,000-hour library of content streaming on virtually all devices. The vast majority of our all-access viewers are in the 18 to 49 demo. So as all-access consumption increases, we are reaching younger consumers all the time. Another good data point we've seen is time spent on All Access, which is up over 60% and growing even faster than total streams. And it's mostly as a result of adding more original series. And we're giving our subscribers more high-profile originals. From the debut of next week's comedic drama, Why Women Kill, to the second new Star Trek series, Star Trek Picard, The two big-name projects we recently picked up, The Stand, which is based on a book from the best-selling Simon & Schuster author Stephen King, and The Man Who Fell to Earth from Alice Kurtzman, who oversees the Star Trek franchise for us. And today, I'm pleased to announce that we are broadening our reach to add kids programming to All Access. Later this year, All Access will begin rolling out 1,000 episodes of library programming and new original seasons of Danger Mouse and Cloudy with a Chance of Meatballs. So now our subscribers' children will have premium content to watch, too. At Showtime, we're also accelerating our investment in content this year with about 40% more original programming than we had in 2018. Much of that programming is coming here in the back half of 2019. This includes the premiere of two dark comedies, Back to Life and On Becoming a God in Central Florida, which is executive produced by George Clooney. And we have several of our fan favorites coming up too, including The Affair, Shameless, Kidding, and Ray Donovan, as well as the highly anticipated return of the groundbreaking series, The L Word. Like All Access, our programming investment is driving significant growth on our Showtime OTT platform. In fact, this year, Showtime's second largest source of distribution revenue is pacing to be broadband, surpassing telco and satellite, and only behind cable. Showtime OTT is proving to be attractive to the growing number of broadband-only households, which are often younger viewers as well. And like All Access, Showtime subscribers are also viewing more and more content over the top, with time spent up approximately 30% this year. Turning to publishing, Simon & Schuster continues to grow on the strength of its content, and there's more to come later this year, with new titles from some of our best-selling authors, including Stephen King and Vince Flynn, as well as the father-son team of Nelson and Alex DeMille, and the mother-daughter duo of Hillary and Chelsea McClinton. In local media, we are ramping up our investment in direct-to-consumer by launching new local versions of our digital news network, CBSN. We have already successfully launched in New York and Los Angeles. And by early next year, we plan to have local versions of CBSN in all 13 major markets where we have news operations. This will enable us to have a more robust multi-platform approach by the time the next election cycle really gets going. so we can fully capitalize on what we expect will be a record year for political spending. Now, before I turn the call over to Joanne, I want to touch on an important announcement you likely heard about this morning, and that is our new carriage agreement deal with AT&T. We are very pleased to have achieved an agreement that recognizes what CBS brings to the table. We have now successfully completed three very significant carriage deals one with AT&T, one with Altice, and one with Nexstar, in the span of less than two weeks. As a result, we remain solidly on track to achieve the retrends and reverse comp targets we laid out for you previously. So, we had a strong first half of 2019, and we have many clear proof points that our strategy is working. We are growing our retrends and reverse comp. We are accelerating the growth of our direct-to-consumer businesses. We are pursuing new opportunities in audience monetization, and we are expanding in the international marketplace where we see our biggest opportunity over time, particularly in direct-to-consumer. And all this is driven by our investment in must-have premium content. So now, as advertised, you guys see what I did there? I'd like to turn the call over to the Dean of Advertising, Joanne Ross. Take it away, Joanne.