Markets

TV Revenues Rise Again, Thanks to Amazon and Netflix

By Constantine von Hoffman

Updated on: August 3, 2011 / 4:41 PM EDT / MoneyWatch

It's good to be in TV again! CBS (CBS), Comcast's NBC (CMCSA) and Time-Warner (TWX) reported substantial earnings increases last quarter driven by advertising and online distribution deals.

A rush by technology businesses to license shows for new portable devices means TV companies are finally reaping the benefits of being content producers. CBS, Comcast's (CMCSA) NBC, and Disney's (DIS) ABC network have all cut licensing deals with Netflix (NFLX) and/or Amazon (AMZN).

The licensing deals have just begun to bring in revenue and will add significantly more to the bottom line as they get up to speed. The main driver for this quarter's revenue increases was rising ad rates. Time-Warner - which is holding back on new media licensing - saw advertising revenue increase 8 percent, including an 11 percent gain at the Turner cable networks.

CBS r evenues were up 8 percent to $3.6 billion and its operating income before depreciation and amortization, jumped 51 percent to $873 million. (BNET is owned by CBS Interactive, a division of CBS.) This was CBS's first earnings report since Netflix bought rights for Internet access to older shows. The Netflix deal helped boost CBS' content licensing and distribution revenue to $889 million, a 21 percent increase over last year. CBS ad revenue was up 3 percent over last year despite the loss of a lot of political advertising and half of the NCAA basketball tournament. (This year CBS split coverage of the tournament with Time-Warner.)
NBC's broadcast revenue was up 18.5 percent to $1.7 billion. Comcast's cable networks also did well with revenues up 12.6 percent to $2.2 billion. Advertising revenue rose 10.3 percent. Distribution revenue rose 44 percent in large part due to licensing of NBC-owned content.

So far, Time-Warner and Fox haven't signed licensing deals with Netflix or Amazon. For now, Warner is sticking with distribution channels such as HBO subscriptions, DISH Network's TV Everywhere service and pay-per-episode video-on-demand services.

Additionally Fox, owned by News Corp. - co-owner of Hulu - is trying to decrease the number of people watching its shows for free on the internet. Last week it said it would hold back free third-party access to all of its TV programming for eight days after initial broadcast.

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