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August 22, 2018
Leslie Moonves
Chairman of the Board, President and Chief Executive Officer
CBS Corporation
51 W. 52nd Street
New York, NY 10019
Re: CBS Corporation
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed February 20, 2018
Form 10-Q for the Period Ended June 30, 2018
Filed August 2, 2018
File No. 001-09553
Dear Mr. Moonves:
We have reviewed your filings and have the following comments. Please
comply with
the following comments in future filings. Confirm in writing that you will do
so and explain to
us how you intend to comply. In some of our comments, we may ask you to provide
us with
information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-K for the Fiscal Year Ended December 31, 2017
Risk Factors
NAI, Through Its Voting Control of the Company, Is in a Position to Control
Actions that
Require Stockholder Approval, page 25
1. You disclose that National Amusements, Inc. ("NAI") is in a position to
control the
outcome of corporate actions that require stockholder approval. In light
of recent
developments, consider expanding your disclosure to address the scope of
NAI's control
over corporate actions normally reserved for board action, including the
specific types of
actions that it can take to direct or control the outcome of certain
matters. For example,
Leslie Moonves
FirstName LastNameLeslie Moonves
CBS Corporation
Comapany NameCBS Corporation
August 22, 2018
Page 2
August 22, 2018 Page 2
FirstName LastName
discuss whether a controlling stockholder such as NAI has the ability
to unilaterally
amend your bylaws under the provisions of your Certificate of
Incorporation and
address the ability of a controlling stockholder to replace directors
in order to compel
certain results.
Additionally, we note your disclosure in your definitive proxy
statement that CBS
Corporation has a majority of independent directors on its board and
maintains
independent committees. We further note your disclosure that by
maintaining the
composition of independent directors on the board, the Company exceeds
the
requirements for controlled companies pursuant to the NYSE listing
standards. However,
in your Form 10-Q for the quarter ended June 30, 2018, you disclose
recent allegations
that NAI has breached its fiduciary duties to CBS stockholders by
"abusing their control
to threaten the independent corporate governance of the company." In
light of these
developments, please:
Expand your disclosure to explain the basis for the Company's
determination that the
board operates independently;
Address whether any actions have been taken that would cast doubt
on or undermine
the board's ability to operate independently;
Disclose the risk that any mechanism designed to maintain the
board's independence,
such as the provision in the bylaws allowing for the board to
issue a dividend that
would have the effect of diluting a controlling stockholder's
voting stake, could be
deemed invalid or challenged in a derivative action, or could be
preempted by the
controlling stockholders' ability to take certain actions.
NAI, Certain Directors and Members of Management May Face Actual or Potential
Conflicts of
Interest, page 27
2. We understand that your certificate of incorporation contains certain
provisions related to
corporate opportunities. Please add a new risk factor disclosing that
no officer or director
of your Company shall be liable to the Company for breach of any
fiduciary duty
concerning activities or corporate opportunities relating to Viacom.
Describe how the
potential conflict of interest could have a material adverse effect on
your business,
financial condition, results of operations, or prospects. Finally,
consider disclosing the
provision in your description of the material terms of the Company's
capital stock.
Free Cash Flow, page II-33
3. We note that your definition of free cash flow excludes discretionary
contributions to pre-
fund your pension plans. Since free cash flow is typically calculated
as cash flow from
operations adjusted by capital expenditures, and your definition of
free cash flow differs
from the typical definition per Question 102.07 of the April 2018 C&DI
on non-GAAP
measures, please revise the title of this measure in future filings.
Leslie Moonves
FirstName LastNameLeslie Moonves
CBS Corporation
Comapany NameCBS Corporation
August 22, 2018
August 22, 2018 Page 3
Page 3
FirstName LastName
General
4. Publicly available information indicates that you have a licensing
agreement with beIN for
CBS and The CW programming for the MENA region. The beIN.net website
indicates
that beIN channel packages include the CBS Reality channel and
provides contact
information for beIN dealers in Sudan and Syria. Additionally, you
state on page I-4 of
the 10-K that you own a 30% interest in a joint venture that owns and
operates cable and
satellite channels, which broadcast CBS programming, in the Middle
East and Africa,
regions that include Sudan and Syria.
Sudan and Syria are designated by the Department of State as state
sponsors of terrorism,
and are subject to U.S. economic sanctions and/or export controls.
Please describe to us
the nature and extent of any past, current, and anticipated contacts
with Sudan and Syria,
including contacts with their governments, whether through
subsidiaries, affiliates,
distributors, partners, customers, joint ventures or other direct or
indirect arrangements.
Please also discuss the materiality of those contacts, in quantitative
terms and in terms of
qualitative factors that a reasonable investor would deem important in
making an
investment decision. Tell us the approximate dollar amounts of
revenues, assets and
liabilities associated with those countries for the last three fiscal
years and the subsequent
interim period. Address for us the potential impact of the investor
sentiment evidenced by
divestment and similar initiatives that have been directed toward
companies that have
operations associated with U.S.-designated state sponsors of
terrorism.
Form 10-Q for the Period Ended June 30, 2018
1. Basis of Presentation and Summary of Significant Accounting Policies
Advertising Revenues, page 7
5. We note certain advertising contracts have guarantees of audience
member views. Please
clarify if these guarantees are treated as variable consideration in
determining your
transaction price. Refer to ASC 606-10-32-5 and 606-10-50-20.
Affiliate and Subscription Fees, page 8
6. Please identify the specific products and/or services transferred to
your customers within
your affiliate agreements. Tell us which products and/or services you
have combined with
others for the purposes of determining your performance obligations
and which you have
treated as a separate performance obligation. Tell us if you believe
these arrangements
contain a functional license of intellectual property and if this is
the predominant item to
which royalties relate. Please also describe the judgments used in
determining both the
timing of satisfaction and amounts allocated to each performance
obligation. To the
extent applicable, tell us how you considered any minimum guarantees.
Refer to
ASC 606-10-50-12 and 606-10-50-17.
Leslie Moonves
CBS Corporation
August 22, 2018
Page 4
7. Please tell us your basis for recognizing revenue on a relative fair
value basis for affiliate
arrangements with fixed fees.
8. Please tell us if you consider your retransmission arrangements to be
functional licenses of
intellectual property and if you are applying the guidance for
sales-based or usage-based
royalties. Please refer to ASC 606-10-50-12.
Program Licensing and Distribution, page 8
9. We note your disclosure on page 43 that you have contracts for library
programming.
Please clarify if existing content and new content represent separate
performance
obligations. In addition, please explain the judgments used in
determining both amounts
allocated to and the timing of satisfaction of the related performance
obligations. Refer to
ASC 606-10-50-12 and ASC 606-10-50-17.
Related Parties, page 63
10. Recent newspaper accounts have suggested that an undisclosed provision
in the NAI
Trust restricts the Trust from voting its controlling interest in CBS
in favor of any
business combination agreement that would leave NAI with less than 30%
of the voting
control of the resulting company. If management or the board is aware
of such a
provision, you should disclose its existence in future filings, and
address the effect of such
a provision on management's ability to negotiate merger transactions.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Kathryn Jacobson, Senior Staff Accountant, at (202) 551-
3365 or Lisa Etheredge, Senior Staff Accountant, at (202) 551-3424 if you have
questions
regarding comments on the financial statements and related matters. Please
contact Joshua
Shainess, Attorney-Adviser, at (202) 551-7951 or Larry Spirgel, Assistant
Director, at (202) 551-
3815 with any other questions.
FirstName LastNameLeslie Moonves Sincerely,
Comapany NameCBS Corporation
Division of
Corporation Finance
August 22, 2018 Page 4 Office of
Telecommunications
FirstName LastName