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CBS Benefits From New Digital Revenue

Friday, 3 Aug 2012 | 11:26 AM ET

Sumner Redstone always kicks off conference calls by proclaiming “content is king.”

CBS
George Rose | Getty Images
CBS

This time on CBS’ quarterly call on Thursday, the company’s chairman praised CEO Les Moonves as a “super genius,” saying, “There are no words to describe the spectacular manner you operate CBS.”

That kind of hyperbole seemed to even strike Moonves as awkward. He said he “was blushing” and then proceeded to run through record earnings of 65 cents, six cents better than expected, and to explain why revenue declined from a year ago.

Quarterly revenue came in at $3.48 billion, but Moonves explained that it was because of one-time items a year ago — streaming revenue and NCAA Basketball revenue — which was included in the prior quarter this year.

CBS is often singled out as being more reliant on advertising than any of the other media companies, but that’s something that Moonves is working to change. This quarter non-advertising revenue grew to 39 percent of the pie, and Moonves says syndication, retransmission fees, and digital revenue, will continue to outpace advertising and become an even bigger piece of the pie.

“We continue to increase the ways we get paid,” he said.

Digital revenue figured prominently in the earnings call, with Moonves pointing to the positive effect of distribution deals with Amazon , Netflix and Hulu Plus ,which is co-owned by NBC Universal , News Corp , Disneyand Providence Equity Partners.

“Interest in our content from all these new entrants in the marketplace is extremely high,” Moonves said.

And this new revenue seems to be purely incremental. As to the digital distribution of Aereo, Barry Diller’s new technology that will not compensateCBS with retransmission fees, Moonves said, “It is not something I lose sleep over even for five minutes.”

Moonves was also bullish about CBS’ bread and butter — pointing to high-quality content and growing advertising. He said that 80 percent of next year’s Super Bowl ads are already sold out, local broadcasting revenue is pacing up in the “high single digits,” and the outdoor segment will benefit from the Olympics.

He said he’s “confident there’s significant upside ahead” when it comes to negotiating retransmission deals. But he made a point of the fact that CBS hasn’t had an “incident” — a blackout like Viacom and DirecTV’s .

He left the door open as he heads into negotiations, saying, “Not to say that we won’t have a dispute that goes public … the few cases making all the noise are a rare exception.”

-By CNBC's Julia Boorstin
@JBoorstin

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.