CBS beat estimates on third quarter earnings and confirmed it's on track to merge with Viacom , but there was one positive on the report that shouldn't be overlooked.
The stock fell 2.27% to $38.29 a share, as the company missed on revenue estimates.
Before we dive into the particulars, here were the headline numbers: Earnings per share came in at 94 cents, beating estimates of 91 cents.
Revenue was $3.3 billion, missing expectations of $3.58 billion.
But the company posted a direct-to-consumer revenue number that grew 39% year-over-year, according to CBS.
That's important, as the dinosaur traditional television company has seen its stock badly underperform over recent years, as media viewers switch to over-the-top platforms, cutting cable chords.
The stock is down 26% in the past five years.
By distributing content over internet platforms like Google's YouTube TV and other mediums, CBS can capture a growing set of eyeballs, rather than a declining one.
Plus, management touted the original content that recently came out as partially a driver of the revenue in DTC.
"Our direct-to-consumer revenue from CBS All Access and Showtime OTT grew 39% from last year, driven by a strong slate of original programming," said Joe Ianniello acting CEO of CBS on the earnings print.
Original content has emerged as a key driver of success in media.
Earnings per share did decline 23% for the quarter, but in 2020 and 2021, revenue and earnings are both expected to grow, according to analysts polled by FactSet.
DTC revenue should be an important part of that picture.
Viacom is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio.
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