Moonves: Average subscriber rate increasing at faster pace

Once again, this is another way to deliver our content directly to consumers how they want it, while giving advertisers a new targeted way to reach younger viewers. We're already doing that with CBS All Access, our digital sports network. Nearly six months after its debut, Sports HQ continues to generate more streams and significantly more daily users than CBS All Access did at this point after its launch. And we're seeing spikes in viewership during all the big sporting events such as the NFL and NBA drafts, the Triple Crown, and the World Cup. In addition, Sports HQ, along with our SportsLine website, stands to benefit from the recent Supreme Court ruling on sports betting by creating a whole new ad category as well as drive demand across our sports-related content. Coming up this fall, we will bring another one of our marquee brands, Entertainment Tonight, over the top as well. ET is the most recognized brand in entertainment news, and just as we've done with news and sports, our new OTT service called ET Live will bring our content to audiences in a whole new way. All of these ad-supported streaming services—CBSN, CBSN Local, CBS Sports HQ, and ET Live—can ultimately be bundled with All Access and Showtime into one comprehensive direct-to-consumer platform. Nobody has a better offering of entertainment, news, sports, and local programming than we do, and these over-the-top services have the added benefit of giving us greater cross-platforming and cross-promotional opportunities. The popularity of broadband services is also benefiting us by driving the adoption of skinny bundles and virtual MVPDs. This includes Hulu Live, YouTube TV, and PlayStation Vue, and it also includes more traditional bundles backed by some terrific companies who are great partners for us as well. No matter the size of the bundle, we continue to negotiate deals with distributors at higher rates that better reflect the fair value of our content. During the second quarter, we renewed our agreement with the third-largest MVPD, Charter Communications. That means that over the last 18 months, we've done deals with three of the top distributors in the industry—Verizon, Dish, and now Charter—giving us more confidence than ever that we will achieve our goal of $2.5 billion in annual retransmission and reverse comp revenue by 2020. And while we achieve higher pricing, we're also growing our total subscriber number for both Showtime and CBS across new and traditional forms of distribution. In fact, our paid subs have now grown sequentially and year-over-year for four consecutive quarters. The CBS app's second quarter was particularly strong, with total subscriber growth up 6% and the average rate per sub up nearly 30%. So at a time when many companies are losing subscribers or cutting rates to maintain them, we are growing, and as we do, our average subscriber rate is increasing at an even faster pace. The driving force behind this growth comes down to one thing: our premium content. Clearly, the CBS Corporation is the content that audiences and distributors have to have each month. With 90% of the U.S. population watching our programming on one or more platforms, so no matter how or where people choose to watch programming, it's clear that what they want to watch is content produced by our company. To satisfy this demand, we're ramping up our production output. We're now producing 70 series across ten broadcast, cable, and streaming outlets, including Netflix, Apple, and TBS. That's more than double the number of series and double the number of outlets that we sold to just five years ago. In addition, we have just two dozen pilots in development with premium cable and streaming companies, including Amazon, YouTube, and Hulu. As we increase the amount of programming we make for third-party distributors, we're driving growth in our content licensing business. This is particularly true in the global marketplace, where the demand for our premium content remains extremely healthy. Already, we've signed licensing deals with international broadcasters for our new fall series before they've even aired in the U.S., including a deal we just announced with RTL. All of this means that content licensing and affiliate and subscription fees are having a bigger and bigger impact on our overall results. During the second quarter, fast-growing revenue sources represented 62% of our overall revenue, meaning that only 38% came from advertising. And the best part of that is that advertising also grew during the second quarter, up 2%. So while advertising continues to become a smaller part of our total, it remains a very important part of our business, and we're set up for continued strength here as well. Once again, we had another terrific upfront with healthy demand, and daytime, news, primetime, and late-night CPMs were up high single to low double digits across dayparts and volume grew as well. From our Thursday night primetime lineup to our Sunday NFL package, our programming is well received, and we sold a number of units for the Super Bowl and the Grammys, which we have on back-to-back weekends in the first quarter of 2019. And the momentum continues here in the third quarter with scatter up more than 20%.