Adam Townsend - CBS Corp. Leslie Moonves - CBS Corp. Joseph R. Ianniello - CBS Corp.

Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC Jessica Jean Reif Cohen - Bank of America Merrill Lynch Alexia S. Quadrani - JPMorgan Securities LLC Michael Morris - Guggenheim Securities LLC Doug Mitchelson - UBS Securities LLC John Janedis - Jefferies LLC Vijay Jayant - Evercore Group LLC David W. Miller - Loop Capital Markets LLC Laura Martin - Needham & Co. LLC Steven Cahall - RBC Capital Markets LLC Marci L. Ryvicker - Wells Fargo Securities LLC

Good day, everyone, and welcome to the CBS Corporation second quarter 2017 earnings release teleconference. Today's call is being recorded. At this time, I would like to turn the call over to Executive Vice President of Corporate Finance and Investor Relations, Mr. Adam Townsend. Please go ahead. Adam Townsend - CBS Corp.: Thank you. Good afternoon, everyone, and welcome again to our second quarter 2017 earnings call. Joining us with today's remarks are Leslie Moonves, our Chairman and CEO; and Joe Ianniello, our Chief Operating Officer. Following Les and Joe's discussion of the company's performance, we will open the call up to questions. Please note that during today's conference call, the second quarter and year-to-date 2017 earnings per share 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. Please note that statements in 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 be found on the Investors section of our website at cbscorporation.com. And with that, it's my pleasure to turn the call over to Les. Leslie Moonves - CBS Corp.: Thank you very much, Adam, and good afternoon, everyone. I'm extremely pleased to tell you today about another great quarter for the CBS Corporation. As you can see from our results, we continue to have more and more success as the landscape continues to change. Revenue was up 9% to $3.3 billion, with top line growth in every one of our four business segments. And EPS was up 12% to $1.04, representing our 30th consecutive quarter of EPS growth. Both of these totals were second quarter records for us. Clearly, our company keeps performing in the way that you've come to expect. Our base advertising business is strong and growing, and at the same time, we're laying new groundwork to ensure even more growth ahead. To do this, we are not only capitalizing on the changes in our industry, but we are shaping the direction of these changes as well. In that regard, I have some important announcements to make right here at the top. Each of them shows how we're continually positioning CBS for the future while also building on the great results we're delivering to you today. First, regarding our OTT services, we can now say that CBS All Access and Showtime OTT are set to exceed 4 million subscribers combined before the end of 2017. We're only in year two of our five-year plan, and already we're more than halfway to our goal of 8 million subs by 2020, which is obviously quite conservative now. These services are just starting to hit their stride with much more and bigger programming to come, so being this far along so early in the game is a terrific development. Next, I'm also pleased to announce today that we will be expanding CBS All Access into the international marketplace starting in the first half of 2018. We will launch initially in Canada and then follow that up with additional countries on multiple continents shortly thereafter. Over time, we will add content from across our corporation to make our service more and more attractive. We are very aware of the international success that other streaming companies have had. We now see a huge opportunity for CBS to go direct to consumer on a much bigger scale worldwide. Also, over at Showtime, today we're announcing that our highly anticipated pay-per-view matchup between Floyd Mayweather and Conor McGregor will be available directly to consumers over-the-top. This is the first time we've made a boxing or pay-per-view event available in this way, and it means that even if you're not yet a Showtime subscriber, you'll be able to purchase the fight directly from Showtime's app or website. Anyone who does will get a free trial to Showtime OTT, which will drive new subs for us as well. And also in the over-the-top arena, CBSN, our digital news service, has been a terrific growth engine for us with streams up 38% in the second quarter. We're now broadening its reach by making it available on CBS All Access, and for the first time as a stand-alone channel in skinny bundles as well. Also, taking the experience we gained developing CBSN, we're now in the early stages of replicating its success in the world of sports. Later this year, we will roll out a 24/7 live streaming channel like CBSN for sports as part of our ongoing OTT strategy. It does not yet have a name. We think sports fans are looking for something like this, and that opportunity is significant. So from All Access and Showtime to CBSN and CBS Sports streaming service, we're building extremely valuable OTT assets as bundles keep getting redefined and reimagined. Clearly, there's a lot of upside here. And as distribution continues to change, the rise of virtual MVPDs and skinny bundles are also a great story for us. These are smaller bundles that focus on the most compelling content and that pay us more per sub than the traditional bundles do. Already this year, we've signed on with Hulu, YouTube TV and fubo, and these new services have begun contributing to our results in a meaningful way. And today, fresh off the presses, we're very pleased to announce that we will also be part of DIRECTV NOW, meaning we will soon be available on the vast majority of all skinny bundles in the marketplace. As Nielsen continues to add these skinny bundles to its measurement, we are benefiting from a dual-revenue stream that includes advertising from ratings and increasing affiliate fees from carriage. Meanwhile, revenue from traditional MVPD distribution continues to grow rapidly, too, with retrans and reverse comp up 25% during the quarter. So when you add this to what I just told you regarding OTT and virtual MVPDs, you can see why this is such a great growth story for us. By exploiting all these different platforms and by successfully licensing our content around the globe, we have dramatically changed our overall revenue mix. Of extreme importance, during the quarter, we achieved a 60%/40% split between non-advertising and advertising revenue, which is a record for us. That's just 40% of our revenue that now comes from advertising. About 10 years ago, it was greater than 70%. We love advertising, but diversifying our revenue leads to more certainty in our earnings. We began pursuing this strategy a long time ago, and as a result our revenue is now faster-growing and more reliable. Don't get me wrong, advertising is doing very well for us, too, as evidenced by the tremendous success the CBS Television Network had in this year's upfront. Despite many predictions that upfront volume would be down, ours was up, plus we got pricing increases in the high-single digits. And in the morning and late night, we did even better with pricing increases up double digits. In addition, we continue to negotiate our upfront deals in a way that better reflects how people are watching our content. It is now standard for advertisers to pay us for commercials that are seen up to seven days after the show airs, otherwise known as C7. And for the first time, there are some deals that get us paid through 35 days. This is a major positive change for us, and when you look at the final numbers from the most recent 2016-2017 season, you can see why. Nielsen's new total content ratings show that our viewership went up 53% when you include days 2 through 35 after air, and last year's audience was just as big as it was 10 years ago. Plus so far, total content ratings really only include VOD and DVRs and not the majority of digital viewing. So there's a long way to go and a major upside for us, and what is clear is that on any given night, we have millions of viewers that are just beginning to be counted and just beginning to be monetized. To take advantage of this, last week we realigned our sales teams so we can more easily sell our CBS content across platforms. We promoted Jo Ann Ross, who's clearly the best in the business, to President and Chief Advertising Revenue Officer. We gave Dave Morris, who'd been Head of CBS Interactive Sales an expanded role; and then we brought in David Lawenda from Facebook who knows the evolving world of digital advertising as well as anybody, and will now oversee the interactive sales team for us. Together, Jo Ann, Dave, and David and our terrific CBS sales force are already fast at work creating new and improved ways for our clients to buy our number one lineup and all the industry-leading content we provide on both broadcast and digital platforms. Beyond advertising, as we mentioned, we derive significant revenue from our CBS lineup through content licensing. This coming season, our own CBS Studios will produce or coproduce more than 80% of our primetime schedule, including five of our six new series, as well as both of the shows we picked up for midseason. In addition, we are producing for Showtime and the CW, and increasingly for outlets outside of the CBS Corporation as well. When you put it all together, CBS Studios is producing an all-time high of 54 series across 11 different media outlets, including broadcast, cable, and some of the biggest streaming platforms in the industry, from Apple to Netflix. And last week, we entered a new content partnership with Imagine, headed by the incomparable Brian Grazer and Ron Howard. With this deal, CBS, Showtime, and All Access will now get a first look at Imagine's television projects. More importantly, going forward, all Imagine shows will be co-produced and co-distributed by CBS, meaning we will now begin monetizing a whole new set of programming from this terrific partner. A great recent example of the power of owning content is the new version of Dynasty that will premiere this fall on CW. We own 100% of the show and we've already licensed it to Netflix in 188 countries, similar to the lucrative deal we did for our new Star Trek: Discovery franchise last year. So this means Dynasty is profitable before it even hits the air. And speaking of international success, this season NCIS was once again recognized as the world's most watched drama, the third time in four years that NCIS has achieved this feat. And as a company, we're four for four because the only year it wasn't NCIS, it was our very own CSI, and we try very hard to get these initials right. Turning to late night, The Late Show with Stephen Colbert and The Late Late Show with James Corden have incredible momentum. This was the first season in 22 years that CBS has been number one at 11:30. And this summer, Colbert is the only late-night broadcast show that's up in all demos, with viewers up 35%. And at 12:30, James Corden is growing faster than any of his broadcast competitors, and his online phenomenon continues to grow. Tomorrow, his Carpool Karaoke spinoff show will make its U.S. debut as a full series on Apple. And we've also licensed the show as a format into many territories around the world. We are extremely proud that both Colbert and Corden were recognized with several big Emmy nominations, including outstanding talk series. It's the first time since 2003 that two daily broadcast late-night talk shows from the same network were nominated for this award in the same year. And remember, these shows have only been around for two years. We also did very well with Emmy nominations at CBS News. Our 43 nominations were more than any other news organization in the business outside of PBS. Part of that was thanks to 60 Minutes, which continues to dominate in the ratings. Even in repeats, it remains the most watched news program this summer despite the direct competition of a new news magazine. So as 60 Minutes enters its 50th anniversary season, we will feature Oprah Winfrey as a new contributor, and it's as strong as ever. Turning to CBS Sports, we're looking forward to the NFL returning next month. We have been working with the league throughout the off-season to enhance the viewing experience, and we're confident this will pay off with higher ratings. We're also excited about the debut of Tony Romo in our broadcast booth, who will no doubt benefit from the tutelage of the great Jim Nantz. Plus, having an entire season of the NFL on CBS All Access is a very important development for us. Late last year when the NFL was added, our weekly sign-ups were on average 75% higher than in the weeks before it was added to our platform. Speaking of All Access, you've all heard quite a bit about the debut of Star Trek: Discovery next month. I've now seen the first six episodes, and I can assure you that it is terrific. It's a perfect vehicle to take All Access to the next level and beyond. After that, in addition to the return of The Good Fight, we've just announced three new All Access original series, including a comedy from Will Ferrell. So with a full season of the NFL, Star Trek: Discovery, and more and more original programming, every episode of every show on CBS this fall, and international expansion, we are just getting started with All Access. At the same time, our Showtime over-the-top service is coming off a terrific quarter as well, thanks largely to Twin Peaks. The premiere of the show led to our biggest day and biggest weekend ever for OTT signups, and the percentage of viewers streaming Twin Peaks is the highest we've ever had for a show, which is good news because OTT subscribers are more profitable for us. To keep up the momentum, last night we had the season premiere of Ray Donovan, and we'll have another new season of Shameless in the fall followed by the return of Homeland and Billions as well. We're also continuing the lucrative expansion of Showtime brand overseas. In addition to the CANAL+ deal we told you about last call, we recently announced an agreement with Fox to bring Showtime to Southeast Asia as well as a deal with Hotstar, India's largest premium streaming platform. Each of these deals begins a new recurring revenue stream for Showtime that will benefit us for years to come. Turning to publishing, Simon & Schuster turned in a terrific quarter as well, led by strong growth in digital audio. We have two big titles on the way here in the third quarter. The first one is a new book from Hillary Clinton called What Happened, in which she truly opens up and gives her personal story about last year's controversial presidential election. And the second is from New England Patriots, Tom Brady, who will share his secrets for nutrition and training, which I'm sure will be helpful to many of you on this call and in this room. And in local media, our TV stations continue to benefit from our big event programming like the final four which performed very well for us locally during the quarter. Looking ahead, we're having good success selling the NFL, and of course our TV stations continue to benefit from retrans as well. So as you have heard, it's been quite a busy few months for us. And as you can see across our company, we continue to manage our business and stay ahead of the game. In distribution, we are leveraging the strength of our content to be a leading player in the new skinny bundles and the traditional ones, too. And with our growing over-the-top channels, we are set up to succeed no matter how people choose to consume their content. In content licensing, we are more active than ever in terms of creating shows that we own. The capacity and the output of CBS Studios is growing rapidly, and as it does, so does our ability to monetize our programming on air and online, domestically and around the world. And in advertising, we are extremely well-positioned to in the back half of 2017. We'll have our new upfront rates, more primetime hours to sell without the political preemptions of last year, and more money in the marketplace without the Summer Olympics. Beyond that, we have political again in 2018 and the Super Bowl back in 2019. Once again, we are extremely pleased with this quarter as well as how we are set up for the future. Clearly across the board, CBS is set up for success and we know how to get the job done. We look forward to delivering for our shareholders in the quarters and years ahead just as we've been doing for a long, long time. With that, I'll turn it over to Joe. Joseph R. Ianniello - CBS Corp.: Thanks, Les. And good afternoon, everyone. As you heard, we turned in another outstanding quarter. We had record results in all of our key financial metrics and we had top line growth in all three of our revenue types. This broad-based success is the direct result of the way we are executing on our core content strategy and diversifying our revenue sources, and it's only the beginning. We are just 17 months into the five-year strategic plan that we laid out for you, and we've already made substantial progress towards achieving the strategic and financial goals we set for our company. And we've done this while we continue to invest in our content and distribution platforms. While we're posting record earnings, we're also continuing to set ourselves up for bigger and better things ahead. Now let me give you some more details about our second quarter results. Revenue for the quarter came in at $3.3 billion, up 9%. Total advertising was up 4% led by our broadcast of the NCAA Final Four, which drove a 7% increase in network advertising. And as you know, our upfront strategy was to make sure we're getting paid for delayed viewing with C7 now the standard and even some agreements for 35 days, we are now able to monetize this consumption much better going forward. Content licensing and distribution was up 12% despite a difficult comp to last year when we booked a large international licensing deal for our deep Star Trek library. This quarter's increase was driven by our domestic and international volume deals, which included dozens of titles from across multiple platforms. In addition, we continue to benefit from the international expansion of Showtime, including a nice lift from the launch of Twin Peaks during the quarter. It's also worth mentioning that we have three third-year hit shows, NCIS New Orleans, Madam Secretary and Scorpion, available to deliver into first-cycle domestic syndication in the future. Affiliate and subscription fee revenue was up 16% led by retrans and reverse comp which were up 25%. As you heard, our over-the-top subscription services are also growing rapidly and our new skinny bundle deals are beginning to make a meaningful contribution to our results given the favorable economics of those contracts. Second quarter operating income of $669 million was up 3% from last year, demonstrating solid growth against a high-margin licensing sale of our Star Trek series a year ago. And our operating income margin came in at a strong 21%. Reported EPS from continuing operations for the second quarter was up 18% to $0.97, driven by higher operating income and share repurchases. Adjusted EPS for the second quarter, which includes our radio results, was up 12% to $1.04. For the first half of 2017 our results are even more impressive. Revenue of $6.6 billion was up 1%, and that includes comping against the Super Bowl that we had in 2016. This year's growth was led by affiliate and subscription fee revenue, which was up 16% and content licensing and distribution, which was up 14%. So thanks to the healthy increases in our high-margin non-advertising revenue, reported EPS from continuing operations was up 16% to $2.06. Now let's turn to our operating segments. Entertainment revenue for the second quarter was $2.18 billion, up 12%. Affiliate and subscription fees led the way and were up 38%, driven by higher retrans, as well as continued growth at CBS All Access, and content licensing sales were up 12%. Entertainment operating income for the second quarter came in at $346 million compared with $351 million last year when we had our high-margin international Star Trek library sale. Cable networks revenue for the second quarter was up 7% to $571 million, driven by strong OTT sub gains and higher revenue from our international content licensing deals. Successful content and expanded distribution models are attracting new subscribers to Showtime, as evidenced by our global success of Twin Peaks. Cable Networks' operating income for the quarter was up 11% to $253 million, fueled by the growth in our more profitable OTT subs. And the Cable Networks' operating income margin for the quarter grew 2 points to 44%. In Publishing, revenue for the second quarter of $206 million was up 10% driven by higher print book sales and continued growth in digital audio, which was up 34%. As you know, premium content also drives this segment and we have a strong pipeline of titles in the back half of the year. In addition to the two that Les mentioned, we also have titles from Stephen King, Vince Flynn, Nelson DeMille and Walter Isaacson. In Publishing, operating income for the second quarter was up 8% to $28 million as a result of solid revenue growth. Local Media revenue for the second quarter was up 4% to $412 million. This business continues to benefit from increases in retrans at our TV stations, and it also got a boost from the strong performance of the NCAA men's basketball tournament. In addition, entertainment, pharma and fast food were just a few advertising categories that showed healthy gains in the quarter. Local Media operating income for the second quarter came in at $127 million, down just $3 million from last year when we had high-margin political sales. And our Local Media operating income margin was a solid 31%. Now let me give you a quick update on our Radio transaction. Our deal to merge CBS Radio with Entercom is on track to close in Q4 of this year. The SEC has completed its review of our current filings so we are just waiting to obtain the necessary approvals from the Department of Justice. We look forward to unlocking the value of this business in the months ahead. Turning to cash flow and our balance sheet, we had another solid quarter of free cash flow which came in at $190 million, up 5% from last year, thanks to the strong growth in affiliate revenue. Also during the quarter, we repurchased 4.7 million shares of our stock for $300 million. This puts us at $800 million in share repurchases for the first half of the year, and we had $3.3 billion remaining on our share buyback program as of June 30. Going forward, we expect to retire more than $1 billion worth of our stock during the second half of 2017. This would include additional share repurchases in the third quarter as well as our Radio exchange offer, which as I said, we expect to complete in the fourth quarter. In addition, during July, we issued a total of $900 million of debt, and we used the net proceeds to refinance existing debt and extend the maturities at attractive rates. Now let me tell you what we see ahead. Local Media revenue is pacing to be up low-single digits in the third quarter. At the network, Q3 scatter demand remains strong and pricing is up double-digits. And as Les mentioned, during the third quarter we will not be competing against the Olympics and we'll get back 10 hours of primetime programming that we pre-empted for our political coverage last year. In content licensing and distribution, we have more than 600 episodes of our hit shows to monetize domestically, and that does not include the 20 new series our studios will launch this season. And in affiliate and subscription fees, we are growing across the board. By years' end, retrans and reverse comp will exceed the halfway mark to our $2.5 billion revenue goal for 2020. And our over-the-top services, All Access and Showtime OTT, should easily surpass 4 million subs combined. Meanwhile, skinny bundles are continuing to become a bigger part of our results as these services launch and expand. So let's take a step back. We had a great quarter at the CBS Corporation, but just as important is how we're set up for long-term success. Just last year, we laid out four key areas that will drive our growth through 2020. We already have many proof points that validate our ambitions and we're even adding new pillars to build beyond that. In retrans and reverse comp, virtually all of our deals come up for renewal over the next three years. As you know, each deal we do is better than the last. Just to put this opportunity into perspective, CBS as a standalone network generates over 10% of the total ratings across the entire television landscape, including all of cable and broadcast. However, today, we are only getting 2% of the distribution fees. So you can see why we're so confident in the upside here. Turning to OTT, we are not even two years into our five-year plan, and we're already passing the halfway point of our sub goal. And let me remind you of all the things we have ahead. On All Access, we'll have Star Trek: Discovery, a full season of the NFL, three more original series, and the addition of CBSN, plus we'll be adding our new sports streaming service later. And at Showtime, we'll have our big pay-per-view boxing event later this month with more down the road, not to mention the original series we premiere each month. That's why we think our 8 million sub goal is very conservative. And to be clear, this does not include taking CBS All Access to the international marketplace, which is a big incremental opportunity for us down the road. Speaking of international, this pillar is growing consistently because we continue to expand our content pipeline. As Les said, our studio is currently producing 54 shows compared to just 33 two years ago. And we're doing more and more deals for our entire Showtime brand, so this gives us the ammunition to fuel our international opportunity. Lastly, we have our two-part pillar. The first part, the skinny bundle, was just a concept not that long ago. Since then we've executed six deals at economics that are much more favorable than what we get on traditional big bundles. And the second part of this pillar, the monetization of delayed viewing, is just beginning. As Les said, Nielsen is now starting to measure some of this time-shifting with more on its way, and our advertising deals are now beginning to capture it. So this is an opportunity the industry has yet to fully maximize. So in summary, our strategy is already having a meaningful impact on our results today. We are growing revenue, diversifying its mix, and laying the groundwork for continued success by investing in premium content. This is why we have so much confidence in what's ahead. With that, Anne, let's open the line for questions.

Thank you. We'll take our first question from Ben Swinburne with Morgan Stanley. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Thank you. I have two questions. First, on All Access, and then I have a question on advertising. Les, when you think about the international opportunity for All Access, can you help us think about your expectations maybe relative to the U.S. now that you guys are going outside of the U.S. with All Access? And how do you weigh that opportunity against the international licensing business, which I believe is over $1 billion a year for the company and growing nicely? How do you think about the risks and opportunities of that as you guys move All Access outside the U.S.? Leslie Moonves - CBS Corp.: Ben, it's a very good question. And obviously, the whole key to international expansion is having the available content that we are making over $1 billion, and that is growing, as Joe had mentioned during the call. Once again, when you see a Netflix getting 50 million international subs, you say gee, that marketplace is so huge, we think there's a way to have our cake and eat it too, perhaps by selling it with the exclusion of our own OTT service. In terms of predicting numbers, it's really hard to do right now. As you saw, we're very pleased with how our domestic site is doing this fall with Star Trek and NFL and new programming. We think it should really grow quite a bit. So I think we're anticipating a great deal of success. And obviously we have the content from Showtime, from CBS, from our library, from all sorts of places that we'll be able to put on it. And once again, as each year goes by, that content should expand. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: And then on the advertising side, this summer we've seen a stronger than expected upfront, as you mentioned, for yourselves, and I think overall for TV. It's been a nice story for television. But at the same time, C3 ratings have been under pressure for the industry, which has hit ad revenue a bit, and you've been talking about the leakage outside of C3 for a long time. I'm just wondering if you feel like we're any closer to capturing incremental dollars and monetizing that delayed viewing, and whether that was a driver for your ad sales reorganization, I think the hiring of Dave Lawenda from Facebook. Just talk about how close we may be to capturing those lost ad dollars from ratings issues. Joseph R. Ianniello - CBS Corp.: All right. Ben, it's Joe. Look, I still think we're obviously in the early innings as an industry. I think this is a major step forward, this upfront. As we said on the call, C7 is now the standard. So obviously, the technological advances are giving us that opportunity again to change out advertisers if they don't want to be part of a longer advertising buy, to switch that out. So look, the opportunity is definitely there. The consumption is there, so that's the good news. And the demand I think is important that we make is there. And so clearly people are watching differently. Again, Nielsen put out the total content ratings for the season. 53%, that's a significant amount of people that are just watching it based on convenience, and that's fine. And if they consume it, our expectation is we should get paid for delivering that. And so we're now set up for that internally. We have contracts that set that up, but more to come later. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Thank you both. Leslie Moonves - CBS Corp.: Great. Thanks, Ben. Adam Townsend - CBS Corp.: Thank you, Ben. Next question, please.

We'll go next to Jessica Reif with Bank of America Merrill Lynch. Jessica Jean Reif Cohen - Bank of America Merrill Lynch: Thanks. I was wondering if you could talk little bit about how you're leveraging this incredible interest in news. Do you have any other plans? And there's been a lot of speculation that CNN could come on the market. How much interest would you have at this point in time? And like a second part to just M&A in general, there's obviously been some consolidation announcements in media this summer, any updated thoughts you can give us on how you're viewing M&A? Leslie Moonves - CBS Corp.: All right. Regarding news, Jessica, obviously we've expanded greatly. CBSN, as we said, is doing extraordinarily well. In addition, what's encouraging for the future is the average age of the news viewer is 20 years below what it is on the network. And then we announced our deal with BBC, so we're able to join with them and get the use of their news. And once again, 60 Minutes is still extremely profitable. The Morning Show has turned into a big hit for us, so that's a big change for us. And with CBSN, the revenues are growing and growing, and we're just trying more and more ways to exploit how we can do that. CBSN just had a primetime series on the network. Two episodes have aired already, and once again, that brand is growing greatly. And Joe, do you want to talk about the M&A? Joseph R. Ianniello - CBS Corp.: Look, Jessica, at the M&A, look, we sit here and we feel strategically complete. We just laid out our growth plan last year. We've given you proof points along the way. We don't need any M&A to achieve the results. We're 100% focused on the operations. We look at everything that's in the marketplace. I think we've shown we're very disciplined in our approach, but our value creation is focused on the key pillars we laid out for you. Jessica Jean Reif Cohen - Bank of America Merrill Lynch: And can I just ask one last question, then? On some of these deals that you're making, the newer deals with virtual MVPDs, how did the minimum guarantees work with the new players? Joseph R. Ianniello - CBS Corp.: Look, we don't want to get into specifics on some of the deal specifics, Jessica. I'm not going to – clearly some of these deals have MGs in them. We're not going say no to that but we want them to be all successful. And so the rate for sub is the most important rate that we look at, and obviously, it's priced accordingly to All Access, as well as the traditional big bundles. So I think any new entrant sees a huge opportunity in the marketplace to deliver a service or a bundle of channels that the consumers want where it's based on demand, and we're a key component of that, and we expect that value to be reflected. Leslie Moonves - CBS Corp.: Our mantra has always been you can't be a new bundle without CBS, and I think we're proving that to be the case. And so we're very pleased to have joined DIRECT. And as we said, we're in the vast majority of the skinnier bundles. Jessica Jean Reif Cohen - Bank of America Merrill Lynch: Thank you. Adam Townsend - CBS Corp.: Thank you, Jessica. Next question, please?

We'll take our next question from Alexia Quadrani with JPMorgan. Alexia S. Quadrani - JPMorgan Securities LLC: Hi. Thank you, just two quick questions. The first one, if you can give us a bit more color on the new sports streaming service that you highlighted on the call, what sports rights you think you'll be able to put on that, or is it going to be more highlights or kind of to be determined? And then a follow-up question just on the OTT subscribers. I mean, you've had such impressive growth in the ones that you own, CBS and Showtime. You've given us some good color in terms of numbers behind those. But if you look outside of the platforms that you own, you know, DIRECTV NOW, Hulu Live, YouTube, all those, any sense of how the numbers can or will compare? I know it's early days for a couple of those, especially DIRECTV NOW you just joined, but any sense of if the numbers in aggregate could be meaningful the way they are on your own platforms? Leslie Moonves - CBS Corp.: All right. Alexia, I'll take the sports question and I'll let Joe do the tougher question. Look, as you know we already have a very proactive online sports group down in Fort Lauderdale, Florida, and as I said, we have the infrastructure that allows CBSN to thrive, which obviously will be used there as well. We have deals with the NFL, the NCAA, FCC football, PGA Tour Golf, lots of different areas. In addition, it's in the very preliminary stages of formation. But CBS is a big player in the sports world. We are going to look to differentiate ourselves from the ESPN and the Fox Sports as well, and we think we have a good opportunity to succeed. The other key, like CBSN, we can keep costs relatively minimal because we already have a great infrastructure for sports like we did with news. So the chances of profitability early on are very good. Joseph R. Ianniello - CBS Corp.: And Alexia, on your OTT sub question, look, the virtual MVPDs are just getting launched. So if you go back to that Investor Day, we did lay out for you 4 million subs by 2020, and we had 8 million subs in total for Showtime and CBS All Access, kind of 4 million apiece. So that gives you some direction on what we think the size is. As we sit here today kind of a year later, we might've been too conservative in those numbers. So these services are just rolling out. They're rolling out kind of locally by market and stuff, so I think we like what we see. I think the user interface is attractive on some of these things, so I think it's going to appeal to a millennial. But it's a different buyer who probably buys CBS All Access. CBS All Access, for the price point is there's no value in the marketplace for it. You're getting tons of live programming, news, sports, plus a deep library and originals for under $10. These other bundles are obviously priced $30 to $40, and it's kind of a suite of services. So we want to be in both of those, and again, we have pretty high expectations on both. Alexia S. Quadrani - JPMorgan Securities LLC: Thank you very much. Adam Townsend - CBS Corp.: Thanks, Alexia. Next question, please?

We'll go next to Michael Morris with Guggenheim Securities. Michael Morris - Guggenheim Securities LLC: Thanks. Good afternoon, guys. I want to follow-up on the sports question. I'm sure you're aware there's some concern in the marketplace about competitive bidding for sports rights over the next 5 to 10 years, particularly from digital competitors. So I'm curious if you can give us an update on your thought on that competitive dynamic, and whether the launch of the streaming service is another tool to help you position in that competitive market in the future? And then second, Joe, you mentioned the 54 shows compared to the 33 shows produced just two years ago. Is it apples-to-apples in terms of the economics on those shows, meaning it's roughly 50% growth in the production economics? And what's the – what does the runway look like for growth from here? Thanks. Leslie Moonves - CBS Corp.: Mike, on the sports, yes, the competitive bidding is becoming more and more out there, and obviously there's digital players in the sports arena. The good news is we have the NCAA tournament till 2032, so I think we're fairly secure in the near- and far-term on that. In terms of the other rights, look, the NFL has always been extremely supportive of broadcast television. Yes, there's going to be a digital component, and you're right, this service could be – allow us to be a bigger player in that and perhaps get certain digital rights as these contracts come up more and more. But once again, we have proven that broadcast is better than cable, ascertained by our NCAA ratings versus some of the cable people who have the NCAA, and I think the NFL has always stated there's a reason that the Super Bowl is always on network television. It's just higher rated, nobody has the reach that we do. There's no question that digital players will become more important, but we think they will go along with broadcast, not alone. Joseph R. Ianniello - CBS Corp.: And Mike, for your 54 shows, yeah, that's produced across broadcast, cable, streaming services. So the economics vary, meaning the revenue we generate might vary across the board there, but so do the costs of the shows, as well. The way we look at it, Mike, it's always got to be margin-accretive. And so as it's margin-accretive, it adds to our margin and it builds our library and we monetize it around the world. So again, it's the best probably ROI we can allocate with the use of a dollar. Michael Morris - Guggenheim Securities LLC: Great. Thanks, guys. Leslie Moonves - CBS Corp.: Thank you. Adam Townsend - CBS Corp.: Thanks, Mike. Next question.

We'll go next with Doug Mitchelson with UBS. Doug Mitchelson - UBS Securities LLC: Thanks so much. I'm trying to gauge what content rights overseas are available for CBS All Access. Are the shows sold to Netflix or Amazon Prime overseas typically exclusive and how long do those deals tend to be? Leslie Moonves - CBS Corp.: Some of them are. Obviously, we sold Star Trek to Netflix and they will have the worldwide rights going forward. However, a lot of our newer deals, we'll do it. For newer shows, we will sell with the exclusion of a CBS-owned streaming service. So once again, as time progresses there will be more and more available content that we'll be able put on CBS All Access internationally, same with Showtime content, same with CW content. The good news is we have so many different pipelines at CBS that produce content, we think we're going to have a pretty nice suite of shows available and that will grow as each year goes by. Doug Mitchelson - UBS Securities LLC: And I think you mentioned having your cake and eating it too. I mean, how do you balance – sustain your growing margins at CBS versus billing out a CBS All Access or a CBS All Access internationally? You highlight it's a really big opportunity. How aggressively do you go after that with deficits financing a build out versus your desire to continue to grow earnings for investors? Leslie Moonves - CBS Corp.: Yes. Our international content obviously sells for a lot of money, and it certainly covers our deficit financing. There is a way to do it where we'll be able to sell to international channels, as well as have them on All Access, or there'll be certain shows that will be direct for All Access. So there will be – it's something, obviously, we're aware of, and it's something we'll monitor. And as we've done with All Access like with Star Trek, we could've put Star Trek on Showtime, on the CBS Television Network, or Netflix, Amazon. They all wanted it for a lot of money. We determined that Star Trek would be far better for All Access and will earn us more money. So we're pretty smart about content monetization. We figure out each property and how to best monetize it, and that will continue in the international marketplace. Doug Mitchelson - UBS Securities LLC: And last one for Joe. Joe, I'm not sure – I've heard the description 10% ratings versus 2% distribution fees from you guys before. Joseph R. Ianniello - CBS Corp.: Do you like that, Doug? Doug Mitchelson - UBS Securities LLC: You know... Joseph R. Ianniello - CBS Corp.: Go check my math. Doug Mitchelson - UBS Securities LLC: It's good news/bad news, because at a 20% growth rate which is great. I think investors are pretty happy with the retrans and reverse retrans story at CBS, there's still a step function opportunity. How do you pursue that? Joseph R. Ianniello - CBS Corp.: We start with pursuing it when the deals come up and that's why we mentioned on the call that all of our deals on retrans and reverse comp through 2020 come up for renewal. So that's when we have the opportunity to kind of reset the marketplace. But when you have the data, everybody likes to talk about data, so we have the data on this and it kind of supports our thesis so it gives us a lot of confidence when we go into those negotiations. So the only thing that really stops us is time. Doug Mitchelson - UBS Securities LLC: I guess what I'm asking is now having this data, do you think that you will be more aggressive than you might have been before? Joseph R. Ianniello - CBS Corp.: Wow, Doug... Leslie Moonves - CBS Corp.: Joe Ianniello can't be more aggressive on anything. Doug Mitchelson - UBS Securities LLC: Fair enough. He doesn't have to, right? Joseph R. Ianniello - CBS Corp.: I appreciate that comment there, Doug. Apparently, I've been lagging, so I'm going to take it up a notch. So those on the call, beware, but I will take that to heart. Look, we shoot for fair value and we believe that markets correct themselves when they're out of balance. And the data suggests that we have a good story to be told and we need to go out to prove to the marketplace that we've earned that money. And the more and more subscribers we get that pay us $6, the more and more confidence we have in the rates we ask for from our distributors. Doug Mitchelson - UBS Securities LLC: Thanks so much, guys. Adam Townsend - CBS Corp.: All right. Thanks, Doug. Next question, please.

We'll go next to John Janedis with Jefferies. John Janedis - Jefferies LLC: Thank you. Hey, guys, I think there's been some uncertainty in the marketplace around the margins on the OTT products, meaning either All Access or Showtime given the programming investments. So can you talk about how you think about scale? I assume it's something way less than the 4 million subs for each. And does the margin profile look dilutive to their respective segments? Joseph R. Ianniello - CBS Corp.: No, the margin is going to be accretive. Look, we obviously invested and had to get the services up and running, and we will have content cost. But as the sub base grows, John, we're looking to grow our overall margin. And so I think you can see that Showtime, as evidenced this quarter and year to date, grew its margin 2 percentage points for the year. For the year to date it's 45%, as we're expanding more content and more platforms. And so we're being prudent on how we do that and again like a step function theory. But it's all margin accretive, and that's the way we're modeling this. And I think again, we laid that out at our Investor Day for you guys. John Janedis - Jefferies LLC: All right. Thanks, Joe. And then maybe – hey, Les, with some of the ratings erosion at certain cable networks, it seems like they're losing the ability to sell certain demos. And with the success of late night and news, are you seeing advertising share gains from cable in some of these younger demos? And do you still think some dollars are shifting back from digital, or is that largely done? Joseph R. Ianniello - CBS Corp.: No, I think look, at the last upfront, which was only a couple of months ago, we definitely saw digital money move to broadcasting. And in terms of cable, I assume the same thing is happening. Once again, the fact that we're doing much better in late night than we've ever done before, a lot of money is going into Colbert. That's a huge difference from where we were previously. And the same thing with the morning news, but it's not all demo related because a lot of what we sell is the little older 25 to 54, and that's doing very well. So we're in a very good position. John Janedis - Jefferies LLC: All right. Thanks, guys. Adam Townsend - CBS Corp.: Thank you, John. Next question, please?

We'll go next to Vijay Jayant with Evercore ISI. Vijay Jayant - Evercore Group LLC: Thanks. One question that keeps getting asked on a lot of these conference calls is what's the trend of the underlying subscriber base? I think that CBS as a platform, given it's in most of the skinny bundles within the ecosystem and a whole host of new virtual MVPDs as well as your CBS All Access. Is it fair to say that – and also your reverse comp is not a per-sub metric, I understand. Could you confirm that? Is it fair to say that the CBS platform is actually growing its subscriber base on what you have under your control? And second, any way you can share with us what the mix was between C3, C7, and even some C35 you saw on the sub front? Thanks so much. Joseph R. Ianniello - CBS Corp.: Okay, Vijay. It's Joe. Here's what I would tell you. First, I can confirm the reverse comp deals are – it's a flat fee. It's a license fee as opposed to tied to subscribers. And the second thing is I think when you look at it across the traditional retrans base plus the skinny bundles plus the direct OTT, we're not seeing any sub erosions here. And I think again, it's consumers find the content they want to consume, and that's really what we're seeing and that's what you can see in the numbers of growing 25% quarter after quarter is what we're posting. As far as the C3/C7, we don't have specifics. We said the C7 is now the standard. The way we describe it is the vast majority of the deals. And as Les said, we're starting to get some at C35 – 35-day deals, which again is also important. So I think more to come there. It's a proof point, and I think we have to show that it works. It works for an advertiser and there's true value and we will monetize it. Vijay Jayant - Evercore Group LLC: Thanks so much. Adam Townsend - CBS Corp.: Great. Thanks, Vijay. Next question, please?

We'll go next to David Miller with Loop Capital Markets. David W. Miller - Loop Capital Markets LLC: Hey, guys. Congratulations on the stellar results. And this just follows up on the previous question. Les, I think it was a year ago after your 2016 upfront results had come out that I had asked you about C3 versus C7. And I think that I had positioned my question in suggesting, at least rhetorically, that there really wasn't a lot of traction with C3 at the time, and that perhaps going forward the currency would just be live and C7. It seems like that's what happened this year. It just seemed like there really wasn't a lot of traction with C3 at all. Do you agree with that? Am I wrong in stating that? Leslie Moonves - CBS Corp.: No, look, going into this year's upfront, I would venture to say that 75% of the deals last year were C3. I think that has shifted a great deal to C7. By the way, it's a positive for advertisers, it's a positive for us as well that more of the people are counted. So I think going in, we had to get the top advertising agencies on board with the C7 metric, and they did. And by and large, every single one of them is there and it is the standard of the day. What is interesting, as we've talked about the total content ratings, when you get up to the C35, which is going to become even more important going forward, you see ratings going up in certain cases literally over 50%. We used The Big Bang Theory from day 2 to day 35. It was up over 50%. It went from something like 17 million viewers to 24 million viewers. So that is substantial, and that's going to mean a lot of money going forward. David W. Miller - Loop Capital Markets LLC: Excellent, thank you very much. Adam Townsend - CBS Corp.: Great. Thank you, David. Next question, please?

We'll go next to Laura Martin with Needham. Laura Martin - Needham & Co. LLC: Hi there. Can you hear me, you guys? Leslie Moonves - CBS Corp.: Yes. Laura Martin - Needham & Co. LLC: Okay, great. So, Joe, so I know you guys are really good at managing over-the-top growth offshore with this margin because you're trading at 12 times earnings. But I cover Netflix, the trade is at six times revenue. So talk to me about why we don't spin off 15% of this and lose money and get there faster? Because actually, first-mover advantage does better in some of these markets. So talk to me about that logic. Joseph R. Ianniello - CBS Corp.: Laura, we have Netflix envy, and we try to present our results in a way to give you the ability to value us on an equivalent metric. So we'll leave the valuation to you guys. We'll post the results and you tell us what it's worth. Leslie Moonves - CBS Corp.: We would love to take all of our profits and put it back into content. We'd be very good at that. Laura Martin - Needham & Co. LLC: Okay. And then staying on this, so, Les, I'm really interested. Is the notion that we're going into news and sports because – is that being driven by the execution of we have this big infrastructure, so now we can go get another revenue stream, or is it that you feel there's a big over-the-top bundle being created and you have entertainment lockdown? So let's get to news, and basically CNN and ESPN which were the two big verticals that were first in the cable bundle? Which one of your theses drives this push into news and sports as it relates to the (55:21)? Leslie Moonves - CBS Corp.: Look, obviously, CNN was doing very well, Fox News was doing very well. To begin a brand-new Cable News Network would not be smart and it also wasn't the new modern form of distribution. So it seemed logical for us to go into streaming having the infrastructure we already did in terms of news. Seeing the success we had with news, we say, all right, there's an opportunity there and sports as well. Not that other people aren't there, but our sports networks are doing extremely well online. And once again, it's a great opportunity to be all things to all people and I think we can do it successfully. Laura Martin - Needham & Co. LLC: Thanks a lot, guys. Leslie Moonves - CBS Corp.: Thanks. Adam Townsend - CBS Corp.: Thanks, Laura. Next question, please?

We'll go next to Steven Cahall with Royal Bank of Canada. Steven Cahall - RBC Capital Markets LLC: Thank you. Just a question on maybe programmatic buying. I think Fox announced earlier that they're starting to do some programmatic buying on local and we saw one of the Group M executives head over to AT&T to do the same there, possibly with Time Warner coming in. So how are you looking at the possibility of an arms race in programmatic or maybe just something more dynamic in terms of ad insertion, particularly as more of your content goes to a virtual format? Leslie Moonves - CBS Corp.: Look, we've been competitive because of our ratings, our programming, et cetera, and every place that we can sell, we can't sell, one of the reasons we restructured our sales division was because we wanted to look at every possible way of selling to achieve maximum revenue. Programmatic is one of those ways. So we're there as well, and as we've done in every other form of advertising, we've competed very successfully. So we think that we're in very good shape with our new construction of our sales division. Steven Cahall - RBC Capital Markets LLC: And then maybe just a quick follow-up on Thursday night football, you're pretty close to that contract coming due. So I was just wondering if you can give us any thoughts as to where do you think the league is going to keep that on the roster, and if so how you look to be in the next round? Thanks. Leslie Moonves - CBS Corp.: Obviously, we have five games. NBC has five games. We expect the NFL to continue and we expect to continue to be a part of it. We love the NFL and we want to continue as we do on Sundays. Adam Townsend - CBS Corp.: Great. Thanks, Steve. Let's take one last question, please.

We'll take that question from Marci Ryvicker from Wells Fargo. Marci L. Ryvicker - Wells Fargo Securities LLC: Thanks. Just how do you view your relationship with your affiliates in the broadcast business model overall? I think what's going on between Fox and Sinclair had the entire market spooked, and we know that you're aggressive in your negotiations with stations, Joe. So any comment just on the business model and your relationship there would be helpful. And then secondly, is there a point where Entercom's stock price get so low that you feel like you need to walk away from the sale of CBS Radio? Joseph R. Ianniello - CBS Corp.: Marci, it's Joe. Look, I think we have a great relationship with our affiliate body. Obviously, we just did a very comprehensive deal with them addressing virtual MVPDs, part of All Access. So we've demonstrated to work with them. We like the model. We want them to be successful. We want to obviously be paid for our success as well. So I think we have a lot of examples of the way we can do it where it's win-win. And so we're pretty proud of that relationship. As far as Entercom goes, look, we assumed Entercom's stock is low and we hope it goes up. I think David Field is the best operator in the industry. I think he's going to have a whole bunch of synergies and opportunities, really, to grow that asset base. And in the coming months, we obviously have to convince investors that that's the best game in town. So we don't have any expectation that the Entercom stock price is going to go lower, but the outs in the deal are there. There's obviously maxim and things of that nature that are in the deal, but we're fully committed to getting this deal done with Entercom. Marci L. Ryvicker - Wells Fargo Securities LLC: Okay, thank you. Adam Townsend - CBS Corp.: Great. Thank you, Marci. Adam Townsend - CBS Corp.: And thank you, everyone, for joining us this evening. Have a great night.

This does conclude today's conference. We thank you for your participation. You may now disconnect.