CBS CORP (Form: 10-Q, Received: 08/07/2017 16:37:06)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-09553

CBS CORPORATION

(Exact name of registrant as specified in its charter)



Delaware (State or other jurisdiction of incorporation or organization)	04-2949533 (I.R.S. Employer Identification No.)

51 W. 52 ^nd Street, New York, New York (Address of principal executive offices)	10019 (Zip Code)

(212) 975-4321

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Number of shares of common stock outstanding at July 31, 2017 :

Class A Common Stock, par value $.001 per share— 37,598,604

Class B Common Stock, par value $.001 per share— 364,054,978

CBS CORPORATION

INDEX TO FORM 10-Q



		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2017 and June 30, 2016	3

	Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Six Months Ended June 30, 2017 and June 30, 2016	4

	Consolidated Balance Sheets (Unaudited) at June 30, 2017 and December 31, 2016	5

	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2017 and June 30, 2016	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition.	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	56

Item 4.	Controls and Procedures.	56

	PART II – OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	57

Item 6.	Exhibits.	58

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PART I – FINANCIAL INFORMATION



Item 1.	Financial Statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Revenues	$	3,257		$	2,976		$	6,600		$	6,564
Costs and expenses:
Operating	2,004			1,758			4,078			4,030
Selling, general and administrative	528			510			1,038			1,013
Depreciation and amortization	56			57			111			114
Other operating items, net	—			—			—			(9		)
Total costs and expenses	2,588			2,325			5,227			5,148
Operating income	669			651			1,373			1,416
Interest expense	(111		)	(100		)	(220		)	(200		)
Interest income	15			8			28			15
Other items, net	5			(4		)	6			(7		)
Earnings from continuing operations before income taxes and equity in loss of investee companies	578			555			1,187			1,224
Provision for income taxes	(169		)	(173		)	(307		)	(379		)
Equity in loss of investee companies, net of tax	(12		)	(9		)	(29		)	(30		)
Net earnings from continuing operations	397			373			851			815
Net earnings (loss) from discontinued operations, net of tax (Note 3)	(339		)	50			(1,045		)	81
Net earnings (loss)	$	58		$	423		$	(194	)	$	896

Basic net earnings (loss) per common share:
Net earnings from continuing operations	$	.98		$	.83		$	2.09		$	1.79
Net earnings (loss) from discontinued operations	$	(.84	)	$	.11		$	(2.57	)	$	.18
Net earnings (loss)	$	.14		$	.94		$	(.48	)	$	1.97

Diluted net earnings (loss) per common share:
Net earnings from continuing operations	$	.97		$	.82		$	2.06		$	1.78
Net earnings (loss) from discontinued operations	$	(.83	)	$	.11		$	(2.53	)	$	.18
Net earnings (loss)	$	.14		$	.93		$	(.47	)	$	1.95

Weighted average number of common shares outstanding:
Basic	405			451			407			455
Diluted	410			455			413			459

Dividends per common share	$	.18		$	.15		$	.36		$	.30

See notes to consolidated financial statements.

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CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; in millions)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017			2016
Net earnings (loss)	$	58	$	423	$	(194	)	$	896
Other comprehensive income, net of tax:
Cumulative translation adjustments	—		—		2			1
Amortization of net actuarial loss and prior service cost	12		9		24			19
Total other comprehensive income, net of tax	12		9		26			20
Total comprehensive income (loss)	$	70	$	432	$	(168	)	$	916

See notes to consolidated financial statements.

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CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except per share amounts)



	At				At
	June 30, 2017				December 31, 2016
ASSETS
Current Assets:
Cash and cash equivalents		$	170			$	598
Receivables, less allowances of $61 (2017) and $60 (2016)		3,299				3,314
Programming and other inventory (Note 4)		1,560				1,427
Prepaid income taxes		41				30
Prepaid expenses		132				185
Other current assets		185				204
Current assets of discontinued operations (Note 3)		299				305
Total current assets		5,686				6,063
Property and equipment		2,967				2,935
Less accumulated depreciation and amortization		1,753				1,694
Net property and equipment		1,214				1,241
Programming and other inventory (Note 4)		2,459				2,439
Goodwill		4,891				4,864
Intangible assets		2,627				2,633
Other assets		2,558				2,707
Assets of discontinued operations (Note 3)		3,218				4,291
Total Assets		$	22,653			$	24,238

LIABILITIES AND STOCKHOLDERS ’ EQUITY
Current Liabilities:
Accounts payable		$	124			$	148
Accrued compensation		223				369
Participants’ share and royalties payable		1,005				1,024
Program rights		262				290
Commercial paper (Note 6)		263				450
Current portion of long-term debt (Note 6)		23				23
Accrued expenses and other current liabilities		1,169				1,249
Current liabilities of discontinued operations (Note 3)		161				155
Total current liabilities		3,230				3,708
Long-term debt (Note 6)		8,898				8,902
Pension and postretirement benefit obligations		1,638				1,769
Deferred income tax liabilities, net		628				590
Other liabilities		3,149				3,129
Liabilities of discontinued operations (Note 3)		2,483				2,451

Commitments and contingencies (Note 10)

Stockholders ’ Equity:
Class A Common Stock, par value $.001 per share; 375 shares authorized; 38 (2017 and 2016) shares issued		—				—
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 832 (2017) and 829 (2016) shares issued		1				1
Additional paid-in capital		43,820				43,913
Accumulated deficit		(19,451		)		(19,257		)
Accumulated other comprehensive loss (Note 8)		(741		)		(767		)
		23,629				23,890
Less treasury stock, at cost; 467 (2017) and 455 (2016) Class B shares		21,002				20,201
Total Stockholders ’ Equity		2,627				3,689
Total Liabilities and Stockholders ’ Equity		$	22,653			$	24,238

See notes to consolidated financial statements.

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CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)



	Six Months Ended
	June 30,
	2017			2016
Operating Activities:
Net earnings (loss)	$	(194	)	$	896
Less: Net earnings (loss) from discontinued operations, net of tax	(1,045		)	81
Net earnings from continuing operations	851			815
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities from continuing operations:
Depreciation and amortization	111			114
Stock-based compensation	85			81
Equity in loss of investee companies, net of tax and distributions	29			34
Change in assets and liabilities, net of investing and financing activities	(167		)	95
Net cash flow provided by operating activities from continuing operations	909			1,139
Net cash flow provided by operating activities from discontinued operations	29			112
Net cash flow provided by operating activities	938			1,251
Investing Activities:
Acquisitions	(21		)	(51		)
Capital expenditures	(68		)	(69		)
Investments in and advances to investee companies	(65		)	(43		)
Proceeds from dispositions	1			19
Other investing activities	14			4
Net cash flow used for investing activities from continuing operations	(139		)	(140		)
Net cash flow used for investing activities from discontinued operations	(13		)	(2		)
Net cash flow used for investing activities	(152		)	(142		)
Financing Activities:
(Repayments of) proceeds from short-term debt borrowings, net	(187		)	163
Repayment of senior debentures	—			(199		)
Proceeds from debt borrowings of CBS Radio	24			—
Repayment of debt borrowings of CBS Radio	(5		)	—
Payment of capital lease obligations	(8		)	(8		)
Payment of contingent consideration	(7		)	—
Dividends	(151		)	(142		)
Purchase of Company common stock	(845		)	(1,033		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(89		)	(57		)
Proceeds from exercise of stock options	39			10
Excess tax benefit from stock-based compensation (Note 1)	—			11
Other financing activities	—			(1		)
Net cash flow used for financing activities	(1,229		)	(1,256		)
Net decrease in cash and cash equivalents	(443		)	(147		)
Cash and cash equivalents at beginning of period (includes $24 (2017) and $6 (2016) of discontinued operations cash)	622			323
Cash and cash equivalents at end of period (includes $9 (2017 and 2016) of discontinued operations cash)	$	179		$	176
Supplemental disclosure of cash flow information
Cash paid for interest:
Continuing operations	$	217		$	207
Discontinued operations	$	39		$	—

Cash paid for income taxes:
Continuing operations	$	272		$	261
Discontinued operations	$	46		$	35

See notes to consolidated financial statements.

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CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollars in millions, except per share amounts)

1 ) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business- CBS Corporation (together with its consolidated subsidiaries unless the context otherwise requires, the “Company” or “CBS Corp.”) is comprised of the following segments: Entertainment (CBS Television, comprised of the CBS Television Network, CBS Television Studios, CBS Studios International, and CBS Television Distribution; CBS Interactive and CBS Films), Cable Networks (Showtime Networks, CBS Sports Network and Smithsonian Networks), Publishing (Simon & Schuster) and Local Media (CBS Television Stations and CBS Local Digital Media).

Discontinued Operations -On February 2, 2017, the Company entered into an agreement with Entercom Communications Corp. (“Entercom”) to combine the Company’s radio business, CBS Radio, with Entercom in a merger to be effected through a Reverse Morris Trust transaction, which is expected to be tax-free to CBS Corp. and its stockholders. In connection with this transaction, the Company intends to split-off CBS Radio through an exchange offer, in which the Company’s stockholders may elect to exchange shares of the Company’s Class B Common Stock for shares of CBS Radio, which will then be immediately converted into shares of Entercom Class A common stock at the time of the merger. CBS Radio has been presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented (See Note 3 ).

Basis of Presentation -The accompanying unaudited consolidated financial statements of the Company have been prepared pursuant to the rules of the Securities and Exchange Commission. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 .

In the opinion of management, the accompanying unaudited financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the financial position, results of operations and cash flows of the Company for the periods presented. Certain previously reported amounts have been reclassified to conform to the current presentation.

Use of Estimates -The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Other Operating Items, Net -Other operating items, net for the six months ended June 30, 2016 included a gain from the sale of a business and a multiyear, retroactive impact of a new operating tax.

Net Earnings (Loss) per Common Share -Basic net earnings (loss) per share (“EPS”) is based upon net earnings (loss) divided by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the effect of the assumed exercise of stock options and vesting of restricted stock units (“RSUs”) and market-based performance share units (“PSUs”) only in the periods in which such effect would have been dilutive. Excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive, were 4 million stock options for each of the three and six months ended June 30, 2017 and 6 million stock options for each of the three and six months ended June 30, 2016 .

- 7 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.



	Three Months Ended		Six Months Ended
	June 30,		June 30,
(in millions)	2017	2016	2017	2016
Weighted average shares for basic EPS	405	451	407	455
Dilutive effect of shares issuable under stock-based compensation plans	5	4	6	4
Weighted average shares for diluted EPS	410	455	413	459

Other Liabilities -Other liabilities consist primarily of the noncurrent portion of residual liabilities of previously disposed businesses, participants’ share and royalties payable, program rights obligations, deferred compensation and other employee benefit accruals.

Additional Paid-In Capital -For the six months ended June 30, 2017 and 2016 , the Company recorded dividends of $148 million and $138 million , respectively, as a reduction to additional paid-in capital as the Company had an accumulated deficit balance.

Adoption of New Accounting Standards

Improvements to Employee Share-Based Payment Accounting

During the first quarter of 2017 , the Company adopted amended Financial Accounting Standards Board (“FASB”) guidance which simplifies several aspects of the accounting for employee share-based payment transactions. Under this amended guidance, all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement in the period in which the awards vest or are exercised. In the statement of cash flows, excess tax benefits are classified with other income tax cash flows in operating activities. As a result of the adoption of this guidance, the Company’s excess tax benefits associated with the exercise of stock options and vesting of RSUs for the three and six months ended June 30, 2017 were recorded in the provision for income taxes on the Consolidated Statements of Operations. The guidance requires the income statement classification to be applied prospectively, and therefore, excess tax benefits for prior periods remain classified in stockholders’ equity on the balance sheet. The Company elected to apply the cash flow classification provision of this guidance prospectively and therefore, excess tax benefits for prior periods remain classified as financing activities on the statements of cash flows. The amended guidance also gives the option to make a policy election to account for forfeitures as they occur. The Company, however, has elected to continue its existing practice of estimating forfeitures.

Simplifying the Accounting for Goodwill Impairment

During the first quarter of 2017 , the Company early adopted amended FASB guidance which simplifies the accounting for goodwill impairment. This guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the amended guidance, a goodwill impairment charge is recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill.

- 8 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Recent Pronouncements

Stock Compensation: Scope of Modification Accounting

In May 2017, the FASB issued amended guidance on the accounting for stock-based compensation which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under this guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award as equity or liability changes as a result of the change in the terms or conditions of a share-based payment award. This guidance, which is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted, is not expected to have an impact on the Company’s consolidated financial statements.

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued amended guidance on the presentation of net periodic pension and postretirement benefit cost (“net benefit cost”). This guidance requires an employer to present on the statement of operations the service cost component of net benefit cost in the same line item(s) as other compensation costs of the related employees. The other components of net benefit cost will be presented in the statement of operations separately from the service cost component and below the subtotal of operating income. This guidance is required to be applied retrospectively and is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted as of the beginning of an annual reporting period. Upon adoption, the Company’s operating income will increase or decrease by an amount equal to the components of net benefit cost other than service cost, which are disclosed in Note 7 .

Clarifying the Definition of a Business

In January 2017, the FASB issued amended guidance on the accounting for business combinations which clarifies the definition of a business and assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under this guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or group of similar assets), the assets acquired would not represent a business. In addition, in order to be considered a business, an acquisition would have to include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The amended guidance also narrows the definition of outputs by more closely aligning it with how outputs are described in FASB guidance for revenue recognition. This guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted.

Intra-Entity Transfers of Assets Other than Inventory

In October 2016, the FASB issued amended guidance on the accounting for income taxes, which eliminates the exception in existing guidance which defers the recognition of the tax effects of intra-entity asset transfers other than inventory until the transferred asset is sold to a third party. Rather, the amended guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance, which is effective for interim and annual periods beginning after December 15, 2017, is not expected to have a material impact on the Company’s consolidated financial statements.

Statement of Cash Flows: Classification of Cash Receipts and Cash Payments

In August 2016, the FASB issued amended guidance which clarifies how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The new guidance is intended to reduce the existing diversity in practice in how certain transactions are classified in the statement of cash flows. This guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted.

- 9 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Leases

In February 2016, the FASB issued new guidance on the accounting for leases, which supersedes previous lease guidance. Under this guidance, for all leases with terms in excess of one year, including operating leases, the Company will be required to recognize on its balance sheet a lease liability and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance retains a distinction between finance leases and operating leases and the classification criteria is substantially similar to previous guidance. Additionally, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed. The Company is currently evaluating the impact of this guidance on its consolidated balance sheets. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted.

Revenue from Contracts with Customers

In May 2014, the FASB issued guidance on the recognition of revenues which provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most existing revenue recognition guidance. The main principle under this guidance is that an entity should recognize revenue at the amount it expects to be entitled to in exchange for the transfer of goods or services to customers. This guidance is effective for the Company beginning in the first quarter of 2018. The Company anticipates that it will apply the modified retrospective method of adoption with the cumulative effect of the initial adoption reflected as an adjustment to the opening balance of accumulated deficit as of the date of adoption. The Company has identified the predominant changes to its accounting policies and is in the process of quantifying the impact on its consolidated financial statements and evaluating the additional disclosures that may be required. The adoption of this guidance is not expected to have a significant impact on the Company’s total revenues. The Company has identified changes to its revenue recognition policies primarily relating to two areas of content licensing and distribution revenues. First, revenues from certain distribution arrangements of third-party content will be recognized based on the gross amount of consideration received by the Company for such sale, with an associated expense recognized for the fees paid to the third-party producer. Under current accounting guidance, such revenues are recognized at the net amount retained by the Company after the payment of fees to the third-party producer. This change will not have an impact on the Company’s operating income. Second, revenues associated with the extension of an existing licensing arrangement, which are currently recognized upon the execution of such extension, will be recognized at a later date once the extension period begins. This change is not expected to have a material impact on the Company’s results on an annual basis, since extensions executed each year are generally offset by extensions for which the license period has begun.

2 ) STOCK-BASED COMPENSATION

The following table summarizes the Company’s stock-based compensation expense for the three and six months ended June 30, 2017 and 2016 .



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
RSUs and PSUs	$	38		$	35		$	71		$	67
Stock options	7			7			14			14
Stock-based compensation expense, before income taxes	45			42			85			81
Related tax benefit	(18		)	(16		)	(33		)	(31		)
Stock-based compensation expense, net of tax benefit	$	27		$	26		$	52		$	50

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CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

During the six months ended June 30, 2017 , the Company granted 2 million RSUs for CBS Corp. Class B Common Stock with a weighted average per unit grant-date fair value of $66.78 . RSUs granted during the first six months of 2017 generally vest over a one - to four -year service period. Compensation expense for RSUs is determined based upon the market price of the shares underlying the awards on the date of grant. For certain RSU awards the number of shares an employee earns ranges from 0% to 120% of the target award, based on the outcome of established performance conditions. Compensation expense is recorded based on the probable outcome of the performance conditions. During the six months ended June 30, 2017 , the Company also granted awards of market-based PSUs. The number of shares that will be issued upon vesting of the PSUs is based on the Company’s stock price performance over a designated measurement period, as well as the achievement of established operating goals. The fair value of the PSUs is determined on the grant date using a Monte Carlo simulation model and is expensed over the required employee service period. The fair value of the PSU awards granted during the six months ended June 30, 2017 was $23 million .

During the six months ended June 30, 2017 , the Company also granted 1 million stock options with a weighted average exercise price of $66.31 . Stock options granted during the first six months of 2017 vest over a four -year service period and expire eight years from the date of grant. Compensation expense for stock options is determined based on the grant date fair value of the award calculated using the Black-Scholes options-pricing model.

Total unrecognized compensation cost related to unvested RSUs and PSUs at June 30, 2017 was $270 million , which is expected to be recognized over a weighted average period of 2.5 years . Total unrecognized compensation cost related to unvested stock option awards at June 30, 2017 was $51 million , which is expected to be recognized over a weighted average period of 2.6 years .

3 ) DISCONTINUED OPERATIONS

On February 2, 2017, the Company entered into an agreement with Entercom to combine the Company’s radio business, CBS Radio, with Entercom in a merger to be effected through a Reverse Morris Trust transaction, which is expected to be tax-free to CBS Corp. and its stockholders. In connection with this transaction, Entercom will issue up to 105 million shares of its Class A common stock on a fully diluted basis, and the Company intends to split-off CBS Radio through an exchange offer, in which the Company’s stockholders may elect to exchange shares of the Company’s Class B Common Stock for shares of CBS Radio, which will then be immediately converted into shares of Entercom Class A common stock at the time of the merger. The Company expects the transaction to be completed during the fourth quarter of 2017, subject to customary approvals and closing conditions. CBS Radio has been classified as held for sale and presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented.

FASB Accounting Standards Codification (“ASC”) 360 requires that an asset classified as held for sale be measured each reporting period at the lower of its carrying amount or fair value less cost to sell. The ultimate value of the transaction with Entercom will be determined based on Entercom’s stock price at the closing of the transaction. The Company recorded noncash charges of $365 million and $1.08 billion for the three and six months ended June 30, 2017 , respectively, to record a valuation allowance to adjust the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom. In accordance with ASC 360, the valuation allowance will continue to be adjusted based on the trading price of Entercom’s stock, which could result in future gains or losses. A 10% change to Entercom’s stock price would change the carrying value of CBS Radio by approximately $100 million .

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CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

For the three and six months ended June 30, 2017 , CBS Radio recorded a restructuring charge of $7 million associated with the reorganization of certain business operations, reflecting severance costs and costs associated with exiting contractual obligations.

The following table sets forth details of net earnings (loss) from discontinued operations for the three and six months ended June 30, 2017 and 2016 .



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenues	$	306		$	313		$	556		$	575
Costs and expenses:
Operating	105			103			194			188
Selling, general and administrative	129			122			251			236
Depreciation and amortization ^(a)	—			6			—			13
Restructuring charge	7			—			7			—
Provision for valuation allowance	365			—			1,080			—
Total costs and expenses	606			231			1,532			437
Operating income (loss)	(300		)	82			(976		)	138
Interest expense	(20		)	—			(39		)	—
Earnings (loss) from discontinued operations	(320		)	82			(1,015		)	138
Income tax provision	(19		)	(32		)	(30		)	(57		)
Net earnings (loss) from discontinued operations, net of tax	$	(339	)	$	50		$	(1,045	)	$	81

(a) CBS Radio has been classified as held for sale beginning in the fourth quarter of 2016. Under ASC 360, assets held for sale are not depreciated or amortized.

The following table presents the major classes of assets and liabilities of the Company’s discontinued operations.



	At				At
	June 30, 2017				December 31, 2016
Receivables, net		$	240			$	244
Other current assets		59				61
Goodwill		1,285				1,285
Intangible assets		2,832				2,832
Net property and equipment		153				145
Other assets		28				29
Valuation allowance for carrying value		(1,080		)		—
Total Assets		$	3,517			$	4,596
Current portion of long-term debt		$	10			$	10
Other current liabilities		151				145
Long-term debt		1,356				1,335
Deferred income tax liabilities		1,010				998
Other liabilities		117				118
Total Liabilities		$	2,644			$	2,606

- 12 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The following table presents CBS Radio’s long-term debt.



	At				At
	June 30, 2017				December 31, 2016
Term Loan due October 2023, net of discount		$	950			$	955
7.250% Senior Notes due November 2024		400				400
Revolving Credit Facility		34				10
Deferred financing costs		(18		)		(20		)
Total long-term debt, including current portion		$	1,366			$	1,345

CBS Radio’s senior secured term loan (“Term Loan”) bears interest at a rate equal to 3.50% plus the greater of the London Interbank Offered Rate (“LIBOR”) and 1.00% . The Term Loan is part of CBS Radio’s credit agreement which also includes a $250 million senior secured revolving credit facility (the “Revolving Credit Facility”) which expires in 2021. Interest on the Revolving Credit Facility is based on either LIBOR or a base rate plus a margin based on CBS Radio’s Consolidated Net Secured Leverage Ratio. The Consolidated Net Secured Leverage Ratio reflects the ratio of CBS Radio’s secured debt (less up to $150 million of cash and cash equivalents) to CBS Radio’s consolidated EBITDA (as defined in the credit agreement). The Revolving Credit Facility requires CBS Radio to maintain a maximum Consolidated Net Secured Leverage Ratio of 4.00 to 1.00.

In connection with financing for the transaction with Entercom, on March 3, 2017, CBS Radio entered into Amendment No. 1 to its credit agreement, dated as of October 17, 2016, to, among other things, create a tranche of Term B-1 Loans in an aggregate principal amount not to exceed $500 million . The Term B-1 Loans are expected to be funded on the closing date of the transaction, subject to customary conditions.

4 ) PROGRAMMING AND OTHER INVENTORY



	At			At
	June 30, 2017			December 31, 2016
Acquired program rights		$	1,892		$	1,773
Internally produced programming:
Released		1,668			1,746
In process and other		405			298
Publishing, primarily finished goods		54			49
Total programming and other inventory		4,019			3,866
Less current portion		1,560			1,427
Total noncurrent programming and other inventory		$	2,459		$	2,439

5 ) RELATED PARTIES

National Amusements, Inc. National Amusements, Inc. (“NAI”) is the controlling stockholder of CBS Corp. and Viacom Inc. Mr. Sumner M. Redstone, the controlling stockholder, chairman of the board of directors and chief executive officer of NAI, is the Chairman Emeritus of CBS Corp. and the Chairman Emeritus of Viacom Inc. In addition, Ms. Shari Redstone, Mr. Sumner M. Redstone’s daughter, is the president and a director of NAI and the vice chair of the Board of Directors of each of CBS Corp. and Viacom Inc. Mr. David R. Andelman is a director of CBS Corp. and serves as a director of NAI. At June 30, 2017 , NAI directly or indirectly owned approximately 79.5% of CBS Corp.’s voting Class A Common Stock, and owned approximately 9.7% of CBS Corp.’s Class A Common Stock and non-voting Class B Common Stock on a combined basis. NAI is controlled by Mr. Redstone through the Sumner M. Redstone National Amusements Trust (the “SMR Trust”), which owns 80% of the voting interest of NAI, and such voting interest of NAI held by the SMR Trust is voted solely by Mr. Redstone until his incapacity or death. The SMR Trust provides that in the event of Mr. Redstone’s death or incapacity, voting control

- 13 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

of the NAI voting interest held by the SMR Trust will pass to seven trustees, who will include CBS Corporation directors Ms. Shari Redstone and Mr. David R. Andelman. No member of the Company’s management is a trustee of the SMR Trust.

Viacom Inc. As part of its normal course of business, the Company licenses its television content, leases production facilities and sells advertising spots to various subsidiaries of Viacom Inc. Viacom Inc. also distributes certain of the Company’s television programs in the home entertainment market. The Company’s total revenues from these transactions were $19 million and $31 million for the three months ended June 30, 2017 and 2016 , respectively, and $73 million and $67 million for the six months ended June 30, 2017 and 2016 , respectively.

The Company places advertisements with and leases production facilities from various subsidiaries of Viacom Inc. The total amounts for these transactions were $4 million for each of the three months ended June 30, 2017 and 2016 and $9 million and $11 million for the six months ended June 30, 2017 and 2016 , respectively.

The following table presents the amounts due from Viacom Inc. in the normal course of business as reflected on the Company’s Consolidated Balance Sheets. Amounts due to Viacom Inc. were minimal at June 30, 2017 and December 31, 2016 .



	At			At
	June 30, 2017			December 31, 2016
Receivables		$	86		$	113
Other assets (Receivables, noncurrent)		51			35
Total amounts due from Viacom Inc .		$	137		$	148

Other Related Parties. The Company has equity interests in two domestic television networks and several international joint ventures for television channels from which the Company earns revenues primarily by selling its television programming. Total revenues earned from sales to these joint ventures were $20 million and $24 million for the three months ended June 30, 2017 and 2016 , respectively, and $49 million and $56 million for the six months ended June 30, 2017 and 2016 , respectively. At June 30, 2017 and December 31, 2016 , total amounts due from these joint ventures were $40 million and $47 million , respectively.

The Company, through the normal course of business, is involved in transactions with other related parties that have not been material in any of the periods presented.

- 14 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

6 ) BANK FINANCING AND DEBT

The following table sets forth the Company’s debt.



	At			At
	June 30, 2017			December 31, 2016
Commercial paper		$	263		$	450
Senior debt (1.95% - 7.875% due 2017 - 2045) ^(a)		8,853			8,850
Obligations under capital leases		68			75
Total debt		9,184			9,375
Less commercial paper		263			450
Less current portion of long-term debt		23			23
Total long-term debt, net of current portion		$	8,898		$	8,902

(a) At June 30, 2017 and December 31, 2016 , the senior debt balances included (i) a net unamortized discount of $49 million and $52 million , respectively, (ii) unamortized deferred financing costs of $41 million and $43 million , respectively, and (iii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $2 million and $5 million , respectively. The face value of the Company’s senior debt was $8.94 billion at both June 30, 2017 and December 31, 2016 .

At June 30, 2017 , the Company classified $400 million of debt which matured in July 2017 and $300 million of debt due May 2018 as long-term debt on the Consolidated Balance Sheet, as a result of the above-mentioned debt refinancing.

Commercial Paper

The Company had outstanding commercial paper borrowings under its $2.5 billion commercial paper program of $263 million and $450 million at June 30, 2017 and December 31, 2016 , respectively, each with maturities of less than 45 days. The weighted average interest rate for these borrowings was 1.42% at June 30, 2017 and 0.98% at December 31, 2016 .

Credit Facility

At June 30, 2017 , the Company had a $2.5 billion revolving credit facility (the “Credit Facility”) which expires in June 2021 . The Credit Facility requires the Company to maintain a maximum Consolidated Leverage Ratio of 4.5x at the end of each quarter as further described in the Credit Facility. At June 30, 2017 , the Company’s Consolidated Leverage Ratio was approximately 2.9x .

The Consolidated Leverage Ratio is the ratio of the Company’s indebtedness from continuing operations, adjusted to exclude certain capital lease obligations, at the end of a quarter, to the Company’s Consolidated EBITDA for the trailing four consecutive quarters. Consolidated EBITDA is defined in the Credit Facility as operating income plus interest income and before depreciation, amortization and certain other noncash items.

- 15 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The Credit Facility is used for general corporate purposes. At June 30, 2017 , the Company had no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $2.49 billion .

7 ) PENSION AND OTHER POSTRETIREMENT BENEFITS

The components of net periodic cost for the Company’s pension and postretirement benefit plans were as follows:



	Pension Benefits						Postretirement Benefits
Three Months Ended June 30,	2017			2016			2017			2016
Components of net periodic cost:
Service cost	$	8		$	7		$	—		$	—
Interest cost	47			53			5			5
Expected return on plan assets	(51		)	(57		)	—			—
Amortization of actuarial loss (gain) ^(a)	26			22			(6		)	(6		)
Net periodic cost	$	30		$	25		$	(1	)	$	(1	)



	Pension Benefits						Postretirement Benefits
Six Months Ended June 30,	2017			2016			2017			2016
Components of net periodic cost:
Service cost	$	15		$	15		$	—		$	—
Interest cost	95			107			9			10
Expected return on plan assets	(101		)	(114		)	—			—
Amortization of actuarial loss (gain) ^(a)	51			43			(11		)	(11		)
Net periodic cost	$	60		$	51		$	(2	)	$	(1	)

(a) Reflects amounts reclassified from accumulated other comprehensive income (loss) to net earnings (loss).

8 ) STOCKHOLDERS’ EQUITY

During the second quarter of 2017 , the Company repurchased 4.7 million shares of its Class B Common Stock under its share repurchase program for $300 million , at an average cost of $63.64 per share. During the six months ended June 30, 2017 , the Company repurchased 12.3 million shares of its Class B Common Stock for $800 million , at an average cost of $65.08 per share, leaving $3.31 billion of authorization at June 30, 2017 .

During the second quarter of 2017 , the Company declared a quarterly cash dividend of $.18 on its Class A and Class B Common Stock, resulting in total dividends of $73 million , which were paid on July 1, 2017 .

- 16 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in the components of accumulated other comprehensive income (loss).



	Cumulative Translation Adjustments		Net Actuarial Gain (Loss) and Prior Service Cost				Accumulated Other Comprehensive Loss
At December 31, 2016	$	151	$	(918	)			$	(767	)
Other comprehensive income before reclassifications	2		—					2
Reclassifications to net earnings (loss)	—		24			^(a)		24
Net other comprehensive income	2		24					26
At June 30, 2017	$	153	$	(894	)			$	(741	)



	Cumulative Translation Adjustments		Net Actuarial Gain (Loss) and Prior Service Cost				Accumulated Other Comprehensive Loss
At December 31, 2015	$	152	$	(922	)			$	(770	)
Other comprehensive income before reclassifications	1		—					1
Reclassifications to net earnings (loss)	—		19			^(a)		19
Net other comprehensive income	1		19					20
At June 30, 2016	$	153	$	(903	)			$	(750	)


(a)	Reflects amortization of net actuarial losses. See Note 7 .

The net actuarial gain (loss) and prior service cost related to pension and other postretirement benefit plans included in other comprehensive income is net of a tax provision of $16 million and $13 million for the six months ended June 30, 2017 and 2016 , respectively.

- 17 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

9 ) INCOME TAXES

The provision for income taxes represents federal, state and local, and foreign income taxes on earnings from continuing operations before income taxes and equity in loss of investee companies.



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Provision for income taxes, including interest and before other discrete items	$	(176	)	$	(171	)	$	(361	)	$	(374	)
Excess tax benefits from stock-based compensation ^(a)	4			—			31			—
Other discrete items ^(b)	3			(2		)	23			(5		)
Provision for income taxes	$	(169	)	$	(173	)	$	(307	)	$	(379	)
Effective income tax rate	29.2		%	31.2		%	25.9		%	31.0		%

(a) Reflects excess tax benefits associated with the exercise of stock options and vesting of RSUs. During the first quarter of 2017, the Company adopted FASB guidance which requires that the difference between the tax benefit from stock-based compensation expense and the deduction on the tax return be recognized within the income tax provision on the statement of operations. Previously, such difference was recognized in stockholders’ equity on the balance sheet. This difference occurs because stock-based compensation expense is recorded based on the grant-date fair value of the award, whereas the tax deduction is based on the fair value on the date the stock option is exercised or the RSU vests. This guidance requires the income statement classification to be applied prospectively, and therefore, excess tax benefits for prior periods remain classified in stockholders’ equity.

(b) For the six months ended June 30, 2017 , primarily reflects tax benefits from the resolution of certain state income tax matters.

10 ) COMMITMENTS AND CONTINGENCIES

Guarantees

The Company has indemnification obligations with respect to letters of credit and surety bonds primarily used as security against non-performance in the normal course of business. At June 30, 2017 , the outstanding letters of credit and surety bonds approximated $101 million and were not recorded on the Consolidated Balance Sheet.

In the course of its business, the Company both provides and receives indemnities which are intended to allocate certain risks associated with business transactions. Similarly, the Company may remain contingently liable for various obligations of a business that has been divested in the event that a third party does not live up to its obligations under an indemnification obligation. The Company records a liability for its indemnification obligations and other contingent liabilities when probable and reasonably estimable.

Legal Matters

General. On an ongoing basis, the Company vigorously defends itself in numerous lawsuits and proceedings and responds to various investigations and inquiries from federal, state, local and international authorities (collectively, ‘‘litigation’’). Litigation may be brought against the Company without merit, is inherently uncertain and always difficult to predict. However, based on its understanding and evaluation of the relevant facts and circumstances, the Company believes that the below-described legal matters and other litigation to which it is a party are not likely, in the aggregate, to have a material adverse effect on its results of operations, financial position or cash flows. Under the Separation Agreement between the Company and Viacom Inc., the Company and Viacom Inc. have agreed to defend and indemnify the other in certain litigation in which the Company and/or Viacom Inc. is named.

- 18 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Claims Related to Former Businesses: Asbestos. The Company is a defendant in lawsuits claiming various personal injuries related to asbestos and other materials, which allegedly occurred principally as a result of exposure caused by various products manufactured by Westinghouse, a predecessor, generally prior to the early 1970s. Westinghouse was neither a producer nor a manufacturer of asbestos. The Company is typically named as one of a large number of defendants in both state and federal cases. In the majority of asbestos lawsuits, the plaintiffs have not identified which of the Company’s products is the basis of a claim. Claims against the Company in which a product has been identified principally relate to exposures allegedly caused by asbestos-containing insulating material in turbines sold for power-generation, industrial and marine use.

Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and the number of pending claims, subject to significant fluctuation from period to period. The Company does not report as pending those claims on inactive, stayed, deferred or similar dockets which some jurisdictions have established for claimants who allege minimal or no impairment. As of June 30, 2017 , the Company had pending approximately 33,240 asbestos claims, as compared with approximately 33,610 as of December 31, 2016 and 34,790 as of June 30, 2016 . During the second quarter of 2017 , the Company received approximately 1,030 new claims and closed or moved to an inactive docket approximately 1,390 claims. The Company reports claims as closed when it becomes aware that a dismissal order has been entered by a court or when the Company has reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the claims, the quality of evidence supporting the claims and other factors. In 2016 , the Company’s costs for settlement and defense of asbestos claims after insurance and taxes were approximately $48 million . In 2015 , as the result of an insurance settlement, insurance recoveries exceeded the Company’s after tax costs for settlement and defense of asbestos claims by approximately $5 million . The Company’s costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses.

The Company believes that its reserves and insurance are adequate to cover its asbestos liabilities. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims. While the number of asbestos claims filed against the Company has remained generally flat in recent years, it is difficult to predict future asbestos liabilities, as events and circumstances may occur including, among others, the number and types of claims and average cost to resolve such claims, which could affect the Company’s estimate of its asbestos liabilities.

Other. The Company from time to time receives claims from federal and state environmental regulatory agencies and other entities asserting that it is or may be liable for environmental cleanup costs and related damages principally relating to historical and predecessor operations of the Company. In addition, the Company from time to time receives personal injury claims including toxic tort and product liability claims (other than asbestos) arising from historical operations of the Company and its predecessors.

11 ) RESTRUCTURING CHARGES

During the year ended December 31, 2016 , in a continued effort to reduce its cost structure, the Company initiated restructuring plans across several of its businesses, primarily for the reorganization of certain business operations. As a result, the Company recorded restructuring charges of $30 million , reflecting $19 million of severance costs and $11 million of costs associated with exiting contractual obligations and other related costs. During the year ended December 31, 2015 , the Company recorded restructuring charges of $45 million , reflecting $24 million of severance costs and $21 million of costs associated with exiting contractual obligations and other related costs. As

- 19 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

of June 30, 2017 , the cumulative settlements for the 2016 and 2015 restructuring charges were $53 million , of which $34 million was for severance costs and $19 million was for costs associated with contractual obligations.



	Balance at			2017				Balance at
	December 31, 2016			Settlements				June 30, 2017
Entertainment		$	20		$	(9	)		$	11
Cable Networks		4			(2		)		2
Publishing		1			(1		)		—
Local Media		12			(4		)		8
Corporate		2			(1		)		1
Total		$	39		$	(17	)		$	22



	Balance at			2016			2016				Balance at
	December 31, 2015			Charges			Settlements				December 31, 2016
Entertainment		$	16		$	16		$	(12	)		$	20
Cable Networks		—			4			—				4
Publishing		—			1			—				1
Local Media		11			6			(5		)		12
Corporate		—			3			(1		)		2
Total		$	27		$	30		$	(18	)		$	39

12 ) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company’s carrying value of financial instruments approximates fair value, except for notes and debentures, which are not recorded at fair value. At June 30, 2017 and December 31, 2016 , the carrying value of the Company’s senior debt was $8.85 billion and the fair value, which is estimated based on quoted market prices for similar liabilities (Level 2) and includes accrued interest, was $9.77 billion and $9.51 billion , respectively.

The Company uses derivative financial instruments primarily to modify its exposure to market risks from fluctuations in foreign currency exchange rates. The Company does not use derivative instruments unless there is an underlying exposure and, therefore, the Company does not hold or enter into derivative financial instruments for speculative trading purposes.

Foreign Exchange Contracts

Foreign exchange forward contracts have principally been used to hedge projected cash flows, in currencies such as the British Pound, the Euro, the Canadian Dollar and the Australian Dollar, generally for periods up to 24 months. The Company designates forward contracts used to hedge committed and forecasted foreign currency transactions as cash flow hedges. Gains or losses on the effective portion of designated cash flow hedges are initially recorded in other comprehensive income and reclassified to the statement of operations when the hedged item is recognized. Additionally, the Company enters into non-designated forward contracts to hedge non-U.S. dollar denominated cash flows.

At June 30, 2017 and December 31, 2016 , the notional amount of all foreign exchange contracts was $356 million and $433 million , respectively.

- 20 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Gains (losses) recognized on derivative financial instruments were as follows:



	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2017			2016		2017			2016		Financial Statement Account
Non-designated foreign exchange contracts	$	(12	)	$	15	$	(20	)	$	9	Other items, net

The fair value of the Company’s derivative instruments was not material to the Consolidated Balance Sheets for any of the periods presented.

The following tables set forth the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016 . These assets and liabilities have been categorized according to the three-level fair value hierarchy established by the FASB, which prioritizes the inputs used in measuring fair value. Level 1 is based on publicly quoted prices for the asset or liability in active markets. Level 2 is based on inputs that are observable other than quoted market prices in active markets, such as quoted prices for the asset or liability in inactive markets or quoted prices for similar assets or liabilities. Level 3 is based on unobservable inputs reflecting the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.



At June 30, 2017	Level 1		Level 2		Level 3		Total
Assets:
Foreign currency hedges	$	—	$	12	$	—	$	12
Total Assets	$	—	$	12	$	—	$	12
Liabilities:
Deferred compensation	$	—	$	361	$	—	$	361
Foreign currency hedges	—		6		—		6
Total Liabilities	$	—	$	367	$	—	$	367



At December 31, 2016	Level 1		Level 2		Level 3		Total
Assets:
Foreign currency hedges	$	—	$	34	$	—	$	34
Total Assets	$	—	$	34	$	—	$	34
Liabilities:
Deferred compensation	$	—	$	347	$	—	$	347
Foreign currency hedges	—		1		—		1
Total Liabilities	$	—	$	348	$	—	$	348

The fair value of foreign currency hedges is determined based on the present value of future cash flows using observable inputs including foreign currency exchange rates. The fair value of deferred compensation liabilities is determined based on the fair value of the investments elected by employees.

- 21 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

13 ) REPORTABLE SEGMENTS

The following tables set forth the Company’s financial performance by reportable segment. The Company’s operating segments, which are the same as its reportable segments, have been determined in accordance with the Company’s internal management structure, which is organized based upon products and services.



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Revenues:
Entertainment	$	2,184		$	1,947		$	4,531		$	4,534
Cable Networks	571			536			1,114			1,061
Publishing	206			187			367			332
Local Media	412			396			821			844
Corporate/Eliminations	(116		)	(90		)	(233		)	(207		)
Total Revenues	$	3,257		$	2,976		$	6,600		$	6,564

Revenues generated between segments primarily reflect advertising sales, television license fees and station affiliation fees. These transactions are recorded at market value as if the sales were to third parties and are eliminated in consolidation.



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Intercompany Revenues:
Entertainment	$	118	$	92	$	237	$	214
Local Media	3		2		6		4
Total Intercompany Revenues	$	121	$	94	$	243	$	218

- 22 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The Company presents operating income (loss) excluding restructuring charges and other operating items, net, each where applicable, (“Segment Operating Income”) as the primary measure of profit and loss for its operating segments in accordance with FASB guidance for segment reporting. The Company believes the presentation of Segment Operating Income is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company’s management and enhances their ability to understand the Company’s operating performance.



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Segment Operating Income (Loss):
Entertainment	$	346		$	351		$	744		$	800
Cable Networks	253			227			501			455
Publishing	28			26			42			39
Local Media	127			130			250			280
Corporate	(85		)	(83		)	(164		)	(167		)
Total Segment Operating Income	669			651			1,373			1,407
Other operating items, net ^(a)	—			—			—			9
Operating income	669			651			1,373			1,416
Interest expense	(111		)	(100		)	(220		)	(200		)
Interest income	15			8			28			15
Other items, net	5			(4		)	6			(7		)
Earnings from continuing operations before income taxes and equity in loss of investee companies	578			555			1,187			1,224
Provision for income taxes	(169		)	(173		)	(307		)	(379		)
Equity in loss of investee companies, net of tax	(12		)	(9		)	(29		)	(30		)
Net earnings from continuing operations	397			373			851			815
Net earnings (loss) from discontinued operations, net of tax	(339		)	50			(1,045		)	81
Net earnings (loss)	$	58		$	423		$	(194	)	$	896

(a) Other operating items, net includes a gain from the sale of an internet business in China and a multiyear, retroactive impact of a new operating tax.



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Depreciation and Amortization:
Entertainment	$	27	$	30	$	56	$	60
Cable Networks	6		5		12		11
Publishing	2		2		3		3
Local Media	12		11		23		22
Corporate	9		9		17		18
Total Depreciation and Amortization	$	56	$	57	$	111	$	114

- 23 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Stock-based Compensation:
Entertainment	$	17	$	16	$	32	$	31
Cable Networks	3		3		6		6
Publishing	1		1		2		2
Local Media	3		3		6		6
Corporate	21		19		39		36
Total Stock-based Compensation	$	45	$	42	$	85	$	81



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Capital Expenditures:
Entertainment	$	24	$	24	$	38	$	37
Cable Networks	4		2		7		4
Publishing	—		3		1		6
Local Media	7		4		12		11
Corporate	6		2		10		11
Total Capital Expenditures	$	41	$	35	$	68	$	69



	At			At
	June 30, 2017			December 31, 2016
Assets:
Entertainment		$	11,441		$	11,262
Cable Networks		2,594			2,618
Publishing		858			880
Local Media		4,018			4,065
Corporate/Eliminations		225			817
Discontinued operations		3,517			4,596
Total Assets		$	22,653		$	24,238

- 24 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

14 ) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

CBS Operations Inc. is a wholly owned subsidiary of the Company. CBS Operations Inc. has fully and unconditionally guaranteed CBS Corp.’s senior debt securities. The following condensed consolidating financial statements present the results of operations, financial position and cash flows of CBS Corp., CBS Operations Inc., the direct and indirect Non-Guarantor Affiliates of CBS Corp. and CBS Operations Inc., and the eliminations necessary to arrive at the information for the Company on a consolidated basis.



	Statement of Operations
	For the Three Months Ended June 30, 2017
	CBS Corp.			CBS Operations Inc.			Non- Guarantor Affiliates			Eliminations			CBS Corp. Consolidated
Revenues	$	42		$	2		$	3,213		$	—		$	3,257
Costs and expenses:
Operating	22			2			1,980			—			2,004
Selling, general and administrative	23			68			437			—			528
Depreciation and amortization	1			6			49			—			56
Total costs and expenses	46			76			2,466			—			2,588
Operating income (loss)	(4		)	(74		)	747			—			669
Interest (expense) income, net	(127		)	(120		)	151			—			(96		)
Other items, net	1			(12		)	16			—			5
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies	(130		)	(206		)	914			—			578
Benefit (provision) for income taxes	39			62			(270		)	—			(169		)
Equity in earnings (loss) of investee companies, net of tax	149			339			(12		)	(488		)	(12		)
Net earnings from continuing operations	58			195			632			(488		)	397
Net loss from discontinued operations, net of tax	—			—			(339		)	—			(339		)
Net earnings	$	58		$	195		$	293		$	(488	)	$	58
Total comprehensive income	$	70		$	190		$	302		$	(492	)	$	70

- 25 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)



	Statement of Operations
	For the Six Months Ended June 30, 2017
	CBS Corp.			CBS Operations Inc.			Non- Guarantor Affiliates			Eliminations			CBS Corp. Consolidated
Revenues	$	84		$	5		$	6,511		$	—		$	6,600
Costs and expenses:
Operating	46			3			4,029			—			4,078
Selling, general and administrative	43			132			863			—			1,038
Depreciation and amortization	2			12			97			—			111
Total costs and expenses	91			147			4,989			—			5,227
Operating income (loss)	(7		)	(142		)	1,522			—			1,373
Interest (expense) income, net	(249		)	(237		)	294			—			(192		)
Other items, net	1			(25		)	30			—			6
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies	(255		)	(404		)	1,846			—			1,187
Benefit (provision) for income taxes	77			122			(506		)	—			(307		)
Equity in earnings (loss) of investee companies, net of tax	(16		)	693			(29		)	(677		)	(29		)
Net earnings (loss) from continuing operations	(194		)	411			1,311			(677		)	851
Net loss from discontinued operations, net of tax	—			—			(1,045		)	—			(1,045		)
Net earnings (loss)	$	(194	)	$	411		$	266		$	(677	)	$	(194	)
Total comprehensive income (loss)	$	(168	)	$	404		$	281		$	(685	)	$	(168	)

- 26 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)



	Statement of Operations
	For the Three Months Ended June 30, 2016
	CBS Corp.			CBS Operations Inc.			Non- Guarantor Affiliates			Eliminations			CBS Corp. Consolidated
Revenues	$	36		$	3		$	2,937		$	—		$	2,976
Costs and expenses:
Operating	15			2			1,741			—			1,758
Selling, general and administrative	21			66			423			—			510
Depreciation and amortization	1			6			50			—			57
Total costs and expenses	37			74			2,214			—			2,325
Operating income (loss)	(1		)	(71		)	723			—			651
Interest (expense) income, net	(124		)	(106		)	138			—			(92		)
Other items, net	(1		)	13			(16		)	—			(4		)
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies	(126		)	(164		)	845			—			555
Benefit (provision) for income taxes	40			51			(264		)	—			(173		)
Equity in earnings (loss) of investee companies, net of tax	509			289			(9		)	(798		)	(9		)
Net earnings from continuing operations	423			176			572			(798		)	373
Net earnings from discontinued operations, net of tax	—			—			50			—			50
Net earnings	$	423		$	176		$	622		$	(798	)	$	423
Total comprehensive income	$	432		$	185		$	611		$	(796	)	$	432

- 27 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)



	Statement of Operations
	For the Six Months Ended June 30, 2016
	CBS Corp.			CBS Operations Inc.			Non- Guarantor Affiliates			Eliminations			CBS Corp. Consolidated
Revenues	$	83		$	6		$	6,475		$	—		$	6,564
Costs and expenses:
Operating	32			3			3,995			—			4,030
Selling, general and administrative	42			132			839			—			1,013
Depreciation and amortization	2			11			101			—			114
Other operating items, net	—			—			(9		)	—			(9		)
Total costs and expenses	76			146			4,926			—			5,148
Operating income (loss)	7			(140		)	1,549			—			1,416
Interest (expense) income, net	(248		)	(210		)	273			—			(185		)
Other items, net	(2		)	3			(8		)	—			(7		)
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies	(243		)	(347		)	1,814			—			1,224
Benefit (provision) for income taxes	77			110			(566		)	—			(379		)
Equity in earnings (loss) of investee companies, net of tax	1,062			549			(30		)	(1,611		)	(30		)
Net earnings from continuing operations	896			312			1,218			(1,611		)	815
Net earnings from discontinued operations, net of tax	—			—			81			—			81
Net earnings	$	896		$	312		$	1,299		$	(1,611	)	$	896
Total comprehensive income	$	916		$	325		$	1,290		$	(1,615	)	$	916

- 28 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)



	Balance Sheet
	At June 30, 2017
	CBS Corp.			CBS Operations Inc.		Non- Guarantor Affiliates			Eliminations			CBS Corp. Consolidated
Assets
Cash and cash equivalents	$	15		$	—	$	155		$	—		$	170
Receivables, net	22			2		3,275			—			3,299
Programming and other inventory	4			3		1,553			—			1,560
Prepaid expenses and other current assets	94			31		266			(33		)	358
Current assets of discontinued operations	—			—		299			—			299
Total current assets	135			36		5,548			(33		)	5,686
Property and equipment	48			205		2,714			—			2,967
Less accumulated depreciation and amortization	26			151		1,576			—			1,753
Net property and equipment	22			54		1,138			—			1,214
Programming and other inventory	3			6		2,450			—			2,459
Goodwill	98			62		4,731			—			4,891
Intangible assets	—			—		2,627			—			2,627
Investments in consolidated subsidiaries	44,467			14,544		—			(59,011		)	—
Other assets	149			8		2,401			—			2,558
Intercompany	—			1,455		28,442			(29,897		)	—
Assets of discontinued operations	—			—		3,218			—			3,218
Total Assets	$	44,874		$	16,165	$	50,555		$	(88,941	)	$	22,653
Liabilities and Stockholders’ Equity
Accounts payable	$	1		$	4	$	119		$	—		$	124
Participants’ share and royalties payable	—			—		1,005			—			1,005
Program rights	4			3		255			—			262
Commercial paper	263			—		—			—			263
Current portion of long-term debt	6			—		17			—			23
Accrued expenses and other current liabilities	383			212		830			(33		)	1,392
Current liabilities of discontinued operations	—			—		161			—			161
Total current liabilities	657			219		2,387			(33		)	3,230
Long-term debt	8,801			—		97			—			8,898
Other liabilities	2,892			238		2,285			—			5,415
Liabilities of discontinued operations	—			—		2,483			—			2,483
Intercompany	29,897			—		—			(29,897		)	—
Stockholders’ Equity:
Preferred stock	—			—		126			(126		)	—
Common stock	1			123		590			(713		)	1
Additional paid-in capital	43,820			—		60,894			(60,894		)	43,820
Retained earnings (accumulated deficit)	(19,451		)	15,894		(13,572		)	(2,322		)	(19,451		)
Accumulated other comprehensive income (loss)	(741		)	22		65			(87		)	(741		)
	23,629			16,039		48,103			(64,142		)	23,629
Less treasury stock, at cost	21,002			331		4,800			(5,131		)	21,002
Total Stockholders’ Equity	2,627			15,708		43,303			(59,011		)	2,627
Total Liabilities and Stockholders’ Equity	$	44,874		$	16,165	$	50,555		$	(88,941	)	$	22,653

- 29 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)



	Balance Sheet
	At December 31, 2016
	CBS Corp.			CBS Operations Inc.		Non- Guarantor Affiliates			Eliminations			CBS Corp. Consolidated
Assets
Cash and cash equivalents	$	321		$	—	$	277		$	—		$	598
Receivables, net	27			2		3,285			—			3,314
Programming and other inventory	3			3		1,421			—			1,427
Prepaid expenses and other current assets	102			55		297			(35		)	419
Current assets of discontinued operations	—			—		305			—			305
Total current assets	453			60		5,585			(35		)	6,063
Property and equipment	47			201		2,687			—			2,935
Less accumulated depreciation and amortization	25			140		1,529			—			1,694
Net property and equipment	22			61		1,158			—			1,241
Programming and other inventory	5			7		2,427			—			2,439
Goodwill	98			62		4,704			—			4,864
Intangible assets	—			—		2,633			—			2,633
Investments in consolidated subsidiaries	44,473			13,853		—			(58,326		)	—
Other assets	150			8		2,549			—			2,707
Intercompany	—			1,785		26,976			(28,761		)	—
Assets of discontinued operations	—			3		4,288			—			4,291
Total Assets	$	45,201		$	15,839	$	50,320		$	(87,122	)	$	24,238
Liabilities and Stockholders ’ Equity
Accounts payable	$	1		$	3	$	144		$	—		$	148
Participants’ share and royalties payable	—			—		1,024			—			1,024
Program rights	4			4		282			—			290
Commercial paper	450			—		—			—			450
Current portion of long-term debt	6			—		17			—			23
Accrued expenses and other current liabilities	421			284		948			(35		)	1,618
Current liabilities of discontinued operations	—			—		155			—			155
Total current liabilities	882			291		2,570			(35		)	3,708
Long-term debt	8,798			—		104			—			8,902
Other liabilities	3,071			244		2,173			—			5,488
Liabilities of discontinued operations	—			—		2,451			—			2,451
Intercompany	28,761			—		—			(28,761		)	—
Stockholders’ Equity:
Preferred stock	—			—		126			(126		)	—
Common stock	1			123		590			(713		)	1
Additional paid-in capital	43,913			—		60,894			(60,894		)	43,913
Retained earnings (accumulated deficit)	(19,257		)	15,483		(13,838		)	(1,645		)	(19,257		)
Accumulated other comprehensive income (loss)	(767		)	29		50			(79		)	(767		)
	23,890			15,635		47,822			(63,457		)	23,890
Less treasury stock, at cost	20,201			331		4,800			(5,131		)	20,201
Total Stockholders’ Equity	3,689			15,304		43,022			(58,326		)	3,689
Total Liabilities and Stockholders’ Equity	$	45,201		$	15,839	$	50,320		$	(87,122	)	$	24,238

- 30 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)



	Statement of Cash Flows
	For the Six Months Ended June 30, 2017
	CBS Corp.			CBS Operations Inc.			Non- Guarantor Affiliates			Eliminations		CBS Corp. Consolidated
Net cash flow (used for) provided by operating activities	$	(608	)	$	(153	)	$	1,699		$	—	$	938
Investing Activities:
Acquisitions	—			—			(21		)	—		(21		)
Capital expenditures	—			(10		)	(58		)	—		(68		)
Investments in and advances to investee companies	—			—			(65		)	—		(65		)
Proceeds from dispositions	—			—			1			—		1
Other investing activities	14			—			—			—		14
Net cash flow provided by (used for) investing activities from continuing operations	14			(10		)	(143		)	—		(139		)
Net cash flow used for investing activities from discontinued operations	—			(1		)	(12		)	—		(13		)
Net cash flow provided by (used for) investing activities	14			(11		)	(155		)	—		(152		)
Financing Activities:
Repayments of short-term debt borrowings, net	(187		)	—			—			—		(187		)
Proceeds from debt borrowings of CBS Radio	—			—			24			—		24
Repayment of debt borrowings of CBS Radio	—			—			(5		)	—		(5		)
Payment of capital lease obligations	—			—			(8		)	—		(8		)
Payment of contingent consideration	—			—			(7		)	—		(7		)
Dividends	(151		)	—			—			—		(151		)
Purchase of Company common stock	(845		)	—			—			—		(845		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(89		)	—			—			—		(89		)
Proceeds from exercise of stock options	39			—			—			—		39
Increase (decrease) in intercompany payables	1,521			164			(1,685		)	—		—
Net cash flow provided by (used for) financing activities	288			164			(1,681		)	—		(1,229		)
Net decrease in cash and cash equivalents	(306		)	—			(137		)	—		(443		)
Cash and cash equivalents at beginning of period (includes $24 million of discontinued operations cash)	321			—			301			—		622
Cash and cash equivalents at end of period (includes $9 million of discontinued operations cash)	$	15		$	—		$	164		$	—	$	179

- 31 -

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)



	Statement of Cash Flows
	For the Six Months Ended June 30, 2016
	CBS Corp.			CBS Operations Inc.			Non- Guarantor Affiliates			Eliminations		CBS Corp. Consolidated
Net cash flow (used for) provided by operating activities	$	(476	)	$	(116	)	$	1,843		$	—	$	1,251
Investing Activities:
Acquisitions	—			—			(51		)	—		(51		)
Capital expenditures	—			(11		)	(58		)	—		(69		)
Investments in and advances to investee companies	—			—			(43		)	—		(43		)
Proceeds from dispositions	(4		)	—			23			—		19
Other investing activities	4			—			—			—		4
Net cash flow used for investing activities from continuing operations	—			(11		)	(129		)	—		(140		)
Net cash flow used for investing activities from discontinued operations	—			—			(2		)	—		(2		)
Net cash flow used for investing activities	—			(11		)	(131		)	—		(142		)
Financing Activities:
Proceeds from short-term borrowings, net	163			—			—			—		163
Repayment of senior debentures	(199		)	—			—			—		(199		)
Payment of capital lease obligations	—			—			(8		)	—		(8		)
Dividends	(142		)	—			—			—		(142		)
Purchase of Company common stock	(1,033		)	—			—			—		(1,033		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(57		)	—			—			—		(57		)
Proceeds from exercise of stock options	10			—			—			—		10
Excess tax benefit from stock-based compensation	11			—			—			—		11
Other financing activities	(1		)	—			—			—		(1		)
Increase (decrease) in intercompany payables	1,503			127			(1,630		)	—		—
Net cash flow provided by (used for) financing activities	255			127			(1,638		)	—		(1,256		)
Net (decrease) increase in cash and cash equivalents	(221		)	—			74			—		(147		)
Cash and cash equivalents at beginning of period (includes $6 million of discontinued operations cash)	267			1			55			—		323
Cash and cash equivalents at end of period (includes $9 million of discontinued operations cash)	$	46		$	1		$	129		$	—	$	176

- 32 -



Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition.
	(Tabular dollars in millions, except per share amounts)

Management’s discussion and analysis of the results of operations and financial condition of CBS Corporation (the “Company” or “CBS Corp.”) should be read in conjunction with the consolidated financial statements and related notes in the Company’s Annual Report filed on Form 10-K for the fiscal year ended December 31, 2016 .

Overview

Business overview and strategy

The Company operates businesses which span the media and entertainment industries, including the CBS Television Network, cable networks, content production and distribution, television stations, internet-based businesses, and consumer publishing. The Company’s principal strategy is to create and acquire premium content that is widely accepted by audiences and generate both advertising and non-advertising revenues from the distribution of this content on multiple media platforms and to various geographic locations. The Company continues to increase its investment in both Company-owned and acquired premium content to enhance its opportunities for revenue growth, which include exhibiting the Company’s content on multiple digital platforms, including the Company’s owned digital streaming services as well as third-party live television streaming offerings; expanding the distribution of its content internationally; and securing compensation from multichannel video programming distributors (“MVPDs”) and television stations affiliated with the CBS Television Network. The Company also seeks to grow its advertising revenues by monetizing all content viewership as industry measurements evolve to reflect viewers’ changing habits. The Company’s continued ability to capitalize on these and other emerging opportunities will provide it with incremental advertising and non-advertising revenues.

Operational highlights - Three Months Ended June 30, 2017 versus Three Months Ended June 30, 2016



Consolidated results of operations					Increase/(Decrease)
Three Months Ended June 30,	2017		2016		$			%
GAAP:
Revenues	$	3,257	$	2,976	$	281		9	%
Operating income	$	669	$	651	$	18		3	%
Net earnings from continuing operations	$	397	$	373	$	24		6	%
Net earnings	$	58	$	423	$	(365	)	(86	)%
Diluted EPS from continuing operations	$	.97	$	.82	$	.15		18	%
Diluted EPS	$	.14	$	.93	$	(.79	)	(85	)%

Non-GAAP: ^(a)
Adjusted net earnings	$	427	$	423	$	4		1	%
Adjusted diluted EPS	$	1.04	$	.93	$	.11		12	%

(a) See page 36 for reconciliations of adjusted results to the most directly comparable financial measures in accordance with accounting principles generally accepted in the United States (“GAAP”).

For the second quarter of 2017 , the Company’s results benefited from growth in retransmission revenues and station affiliation fees as well as an increase in television licensing sales, reflecting a higher volume of titles available for sale as a result of recent increased investment in internally-produced series. However, the comparison with the prior year was impacted by the high-margin international licensing of five Star Trek library series in the second quarter of 2016.

For the three months ended June 30, 2017 , the 9% increase in revenues reflects growth across all of the Company’s major revenue streams, led by 16% growth in affiliate and subscription fee revenues, which was driven by 25% growth in station affiliation fees and retransmission revenues, as well as growth from new initiatives, including the Company’s owned streaming subscription services, CBS All Access and the Showtime digital streaming

- 33 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

subscription offering, and third-party live television streaming services. Advertising revenues increased 4% as a result of the broadcast of the semifinals and finals of the NCAA Division I Men’s Basketball Championship (“NCAA Tournament”), which are broadcast on the CBS Television Network every other year through 2032 under the current agreements with the NCAA and Turner Broadcasting System, Inc. Content licensing and distribution revenues benefited from a higher volume of television licensing sales and increased 12% , despite the international licensing sales of Star Trek library programming in the second quarter of 2016 .

Operating income for the three months ended June 30, 2017 increased 3% , primarily driven by the growth in affiliate and subscription fee revenues, partially offset by lower non-sports advertising revenues. The operating income margin decreased one point to 21% for the second quarter of 2017 from 22% for the second quarter of 2016, primarily as a result of the mix of revenues. 2016 included higher-margin television licensing sales of Star Trek library programming, and 2017 was impacted by lower-margin revenues from the NCAA Tournament. Net earnings from continuing operations increased 6% and diluted earnings per share (“EPS”) from continuing operations increased 18% , reflecting the higher operating income. Diluted EPS from continuing operations also benefited from lower weighted average shares outstanding in the second quarter of 2017 as a result of the Company’s ongoing share repurchase program. Net earnings for the three months ended June 30, 2017 of $58 million included a noncash charge of $365 million , or $.89 per diluted share, in discontinued operations to reduce the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom Communications Corp. (“Entercom”). CBS Radio is classified as held for sale and therefore, in accordance with Financial Accounting Standards Board (“FASB”) guidance, its carrying value will continue to be adjusted based on the trading price of Entercom’s stock, which could result in future gains or losses.

Operational highlights - Six Months Ended June 30, 2017 versus Six Months Ended June 30, 2016



Consolidated results of operations						Increase/(Decrease)
Six Months Ended June 30,	2017			2016		$			%
GAAP:
Revenues	$	6,600		$	6,564	$	36		1	%
Operating income	$	1,373		$	1,416	$	(43	)	(3	)%
Net earnings from continuing operations	$	851		$	815	$	36		4	%
Net earnings (loss)	$	(194	)	$	896	$	(1,090	)	(122	)%
Diluted EPS from continuing operations	$	2.06		$	1.78	$	.28		16	%
Diluted EPS	$	(.47	)	$	1.95	$	(2.42	)	(124	)%

Non-GAAP: ^(a)
Adjusted operating income	$	1,373		$	1,407	$	(34	)	(2	)%
Adjusted net earnings from continuing operations	$	829		$	816	$	13		2	%
Adjusted net earnings	$	868		$	897	$	(29	)	(3	)%
Adjusted diluted EPS from continuing operations	$	2.01		$	1.78	$	.23		13	%
Adjusted diluted EPS	$	2.10		$	1.95	$	.15		8	%

(a) See pages 36 - 37 for reconciliations of adjusted results to the most directly comparable financial measures in accordance with GAAP.

For the six months ended June 30, 2017 , revenues increased 1% despite a difficult comparison to 2016, which included CBS’s broadcast of Super Bowl 50 and international licensing sales of five Star Trek library series. The growth was driven by 16% higher affiliate and subscription fee revenues, led by 27% growth in station affiliation fees and retransmission revenues, as well as growth from new initiatives, including the Company’s owned streaming subscription services, CBS All Access and the Showtime digital streaming subscription service, and third-

- 34 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

party live television streaming services. In addition, content licensing and distribution revenues increased 14% , reflecting growth in domestic television licensing sales and strong demand for the Company’s content internationally, partially offset by the aforementioned 2016 sales of Star Trek library programming.

Operating income decreased 3% for the six months ended June 30, 2017 , primarily as a result of a mix of lower-margin revenues in 2017 compared to 2016. Net earnings from continuing operations increased 4% and diluted EPS from continuing operations increased 16% , as a result of tax benefits in 2017 from the resolution of certain state income tax matters and from the exercise of stock options and vesting of restricted stock units (“RSUs”) as a result of the adoption of new accounting guidance during the first quarter of 2017, partially offset by lower operating income. Diluted EPS from continuing operations also benefited from lower weighted average shares outstanding in 2017 as a result of the Company’s ongoing share repurchase program. Adjusted net earnings from continuing operations and adjusted diluted EPS from continuing operations, which exclude a tax benefit of $22 million , or $.05 per diluted share, from the resolution of state income tax matters, increased 2% and 13% , respectively. The Company reported a net loss of $194 million for the six months ended June 30, 2017 , which included a noncash charge of $1.08 billion , or $2.62 per diluted share, in discontinued operations to reduce the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom. CBS Radio is classified as held for sale and therefore, in accordance with FASB guidance, its carrying value will continue to be adjusted based on the trading price of Entercom’s stock, which could result in future gains or losses. Adjusted net earnings from continuing operations and Adjusted diluted EPS from continuing operations are non-GAAP financial measures. See pages 36 - 37 for details of the discrete items excluded from financial results, along with reconciliations of adjusted results to the most directly comparable financial measures in accordance with GAAP.

The Company generated operating cash flow from continuing operations of $909 million for the six months ended June 30, 2017 compared with $1.14 billion for the six months ended June 30, 2016 . Free cash flow for the six months ended June 30, 2017 was $841 million compared with $1.07 billion for the same prior-year period. These decreases were driven by the benefit in 2016 from CBS’s broadcast of Super Bowl 50, and discretionary pension contributions of $100 million made during the first quarter of 2017 to prefund the Company’s qualified plans. Free cash flow for the three and six months ended June 30, 2017 benefited from higher affiliate and subscription fee revenues. Free cash flow is a non-GAAP financial measure. See “Free Cash Flow” on pages 51 - 52 for a reconciliation of net cash flow provided by (used for) operating activities, the most directly comparable GAAP financial measure, to free cash flow.

Recent Developments

In connection with the Company’s previously announced agreement to combine CBS Radio with Entercom in a merger following the separation of CBS Radio through a tax-free split-off, CBS Radio filed a registration statement on Forms S-4 and S-1 with the Securities and Exchange Commission (“SEC”) on April 13, 2017, and two subsequent amendments to such registration statement, with the most recent amendment filed on July 10, 2017. The Company expects the transaction to be completed during the fourth quarter of 2017, subject to customary approvals and closing conditions. CBS Radio has been presented as a discontinued operation in the consolidated financial statements for all periods presented.

In July 2017, the Company issued $400 million of 2.50% senior notes due 2023 and $500 million of 3.375% senior notes due 2028 . The Company used the net proceeds from these issuances to repay its $400 million outstanding 1.95% senior notes which matured on July 1, 2017, and to redeem all of its $300 million outstanding 4.625% senior notes due May 2018. The remaining net proceeds were used for general corporate purposes, including the repayment of short-term borrowings, including commercial paper. Subsequent to the July 2017 issuances, repayment and redemption of senior notes, the Company had $9.04 billion of long-term debt outstanding, excluding capital leases, at a weighted average interest rate of 4.43% .

- 35 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Share Repurchases and Dividends

Reconciliation of Non-GAAP Measures

Results for the three and six months ended June 30, 2017 and the six months ended June 30, 2016 included discrete items that were not part of the normal course of operations. The following tables present non-GAAP financial measures, which exclude the impact of these discrete items, reconciled to the most directly comparable financial measures in accordance with GAAP. The Company believes that presenting its financial results adjusted for the impact of discrete items is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by the Company’s management and provides a clearer perspective on the underlying performance of the Company.



	Three Months Ended June 30, 2017
	Reported			Discontinued Operations Adjustments ^(a)			Adjusted
Net earnings from continuing operations	$	397			$	—	$	397
Net earnings (loss) from discontinued operations, net of tax	(339		)		369		30
Net earnings	$	58			$	369	$	427
Diluted EPS from continuing operations	$	.97			$	—	$	.97
Diluted EPS	$	.14			$	.90	$	1.04



	Six Months Ended June 30, 2017
	Reported			Discrete Tax Item ^(b)				Discontinued Operations Adjustments ^(a)			Adjusted
Earnings from continuing operations before income taxes	$	1,187			$	—			$	—	$	1,187
Provision for income taxes	(307		)		(22		)		—		(329		)
Equity in loss of investee companies, net of tax	(29		)		—				—		(29		)
Net earnings from continuing operations	851				(22		)		—		829
Net earnings (loss) from discontinued operations, net of tax	(1,045		)		—				1,084		39
Net earnings (loss)	$	(194	)		$	(22	)		$	1,084	$	868
Diluted EPS from continuing operations	$	2.06			$	(.05	)		$	—	$	2.01
Diluted EPS	$	(.47	)		$	(.05	)		$	2.62	$	2.10

(a) Reflects noncash charges of $365 million and $1.08 billion for the three and six months ended June 30, 2017 , respectively, to record a valuation allowance for the carrying value of CBS Radio, and a restructuring charge of $7 million ( $4 million , net of tax) at CBS Radio.

(b) Reflects a tax benefit in the first quarter of 2017 from the resolution of certain state income tax matters.

- 36 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)



	Six Months Ended June 30, 2016
	Reported			Other Operating Items ^(a)				Write-down of Investment ^(b)			Adjusted
Operating income	$	1,416			$	(9	)		$	—	$	1,407
Interest expense	(200		)		—				—		(200		)
Interest income	15				—				—		15
Other items, net	(7		)		—				—		(7		)
Earnings from continuing operations before income taxes	1,224				(9		)		—		1,215
Provision for income taxes	(379		)		4				—		(375		)
Equity in loss of investee companies, net of tax	(30		)		—				6		(24		)
Net earnings from continuing operations	815				(5		)		6		816
Net earnings from discontinued operations, net of tax	81				—				—		81
Net earnings	$	896			$	(5	)		$	6	$	897
Diluted EPS from continuing operations	$	1.78			$	(.01	)		$	.01	$	1.78
Diluted EPS	$	1.95			$	(.01	)		$	.01	$	1.95

(a) Reflects a gain on the sale of an internet business in China and a multiyear, retroactive impact of a new operating tax.

(b) Reflects the write-down of an international television joint venture to its fair value.

Consolidated Results of Operations

Three and Six Months Ended June 30, 2017 versus Three and Six Months Ended June 30, 2016

Revenues



	Three Months Ended June 30,
			% of Total Revenues				% of Total Revenues		Increase/(Decrease)
Revenues by Type	2017		% of Total Revenues		2016		% of Total Revenues		$			%
Advertising	$	1,299	40	%	$	1,245	42	%	$	54		4	%
Content licensing and distribution	1,056		32		943		32		113			12
Affiliate and subscription fees	848		26		733		24		115			16
Other	54		2		55		2		(1		)	(2	)
Total Revenues	$	3,257	100	%	$	2,976	100	%	$	281		9	%



	Six Months Ended June 30,
			% of Total Revenues				% of Total Revenues		Increase/(Decrease)
Revenues by Type	2017		% of Total Revenues		2016		% of Total Revenues		$			%
Advertising	$	2,902	44	%	$	3,330	51	%	$	(428	)	(13	)%
Content licensing and distribution	1,901		29		1,672		25		229			14
Affiliate and subscription fees	1,690		25		1,455		22		235			16
Other	107		2		107		2		—			—
Total Revenues	$	6,600	100	%	$	6,564	100	%	$	36		1	%

Advertising

For the three months ended June 30, 2017 , the 4% increase in advertising revenues reflects 7% growth in network advertising revenues, driven by CBS’s broadcast of the semifinals and finals of the NCAA Tournament, partially offset by a decline in non-sports advertising revenues. The semifinals and finals of the NCAA Tournament are broadcast on the CBS Television Network every other year through 2032 under the current agreements with the NCAA and Turner Broadcasting System, Inc. For the six months ended June 30, 2017 , the 13% decrease in advertising revenues primarily reflects the impact of two noncomparable sporting events that benefited 2016: the

- 37 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

broadcast of Super Bowl 50 and one additional NFL playoff game on the CBS Television Network, as well as lower political and non-sports advertising sales. These decreases were partially offset by the previously mentioned broadcast of additional NCAA Tournament games in the second quarter of 2017.

The Company recently completed the CBS Television Network’s upfront advertising sales (“Upfront”) for the 2017/2018 television broadcast season, which runs from the middle of September 2017 through the middle of September 2018. A significant portion of advertising spots for the CBS Television Network’s non-sports programming is sold during May through July in the Upfront each year. This year’s Upfront concluded with increases in pricing compared with the prior broadcast season, and a majority of the Company’s deals will be based on a live-plus-seven day viewing window, which are expected to benefit advertising revenues during the 2017/2018 broadcast season. However, overall advertising revenues for the Company will be dependent on ratings for its programming and market conditions, including demand in the scatter advertising market, which is when advertisers purchase the remaining advertising spots closer to the broadcast of the related programming. Additionally, in the second half of 2017, the advertising revenue comparison with the prior year will continue to be negatively affected by the benefit in 2016 from strong political advertising.

Content Licensing and Distribution

For the three months ended June 30, 2017 , content licensing and distribution revenues benefited from a higher volume of television licensing sales and increased 12% , despite the international licensing sales of five Star Trek library series in the second quarter of 2016. For the six months ended June 30, 2017 , the 14% increase in content licensing and distribution revenues was driven by growth in domestic television licensing sales and strong demand for the Company’s content internationally, partially offset by the licensing sales of Star Trek in 2016. Content licensing and distribution revenues for the three and six months ended June 30, 2017 benefited from additional titles available for sale as a result of the Company’s recent increased investment in internally-produced series.

For the remainder of 2017 , the content licensing and distribution revenues comparison will be impacted by fluctuations resulting from the timing of when Company-owned television series are made available for multiyear licensing agreements. Television license fee revenues are recognized at the beginning of the license period in which programs are made available to the licensee for exhibition.

Affiliate and Subscription Fees

For the three and six months ended June 30, 2017 , the increase in affiliate and subscription fees of 16% in each period reflects growth in station affiliation fees and retransmission revenues, and higher revenues from new initiatives, including the Company’s owned streaming subscription services, CBS All Access and the Showtime digital streaming subscription offering, and third-party live television streaming offerings.

Affiliate and subscription fees for the third quarter of 2017 are expected to include revenues from the Floyd Mayweather/Conor McGregor pay-per-view boxing event.

Over the next few years, the Company expects to benefit from the renewal of several of its agreements with station affiliates and MVPDs as well as from agreements with new distributors of live television streaming offerings. In addition, the Company’s existing agreements with station affiliates and MVPDs include annual contractual increases. Together, these factors are expected to result in continued growth in affiliate and subscription fees over the next several years.

- 38 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

International Revenues

The Company generated approximately 15% and 19% of its total revenues from international regions for the three months ended June 30, 2017 and 2016 , respectively, and generated approximately 14% and 15% of its total revenues from international regions for the six months ended June 30, 2017 and 2016 , respectively.

Operating Expenses



	Three Months Ended June 30,
			% of Operating Expenses				% of Operating Expenses		Increase/(Decrease)
Operating Expenses by Type	2017		% of Operating Expenses		2016		% of Operating Expenses		$		%
Programming	$	652	33	%	$	525	30	%	$	127	24	%
Production	726		36		630		36		96		15
Participation, distribution and royalty	290		14		285		16		5		2
Other	336		17		318		18		18		6
Total Operating Expenses	$	2,004	100	%	$	1,758	100	%	$	246	14	%



	Six Months Ended June 30,
			% of Operating Expenses				% of Operating Expenses		Increase/(Decrease)
Operating Expenses by Type	2017		% of Operating Expenses		2016		% of Operating Expenses		$			%
Programming	$	1,509	37	%	$	1,633	41	%	$	(124	)	(8	)%
Production	1,383		34		1,267		31		116			9
Participation, distribution and royalty	526		13		497		12		29			6
Other	660		16		633		16		27			4
Total Operating Expenses	$	4,078	100	%	$	4,030	100	%	$	48		1	%

For the three months ended June 30, 2017 , the 24% increase in programming expenses was driven by higher sports programming costs, mainly associated with CBS’s broadcast of the semifinals and finals of the NCAA Tournament. For the six months ended June 30, 2017 , the 8% decrease in programming expenses was driven by lower sports programming costs, as 2016 included costs associated with the broadcast of Super Bowl 50 , which were partially offset by costs associated with the 2017 broadcast of additional NCAA Tournament games.

For the three and six months ended June 30, 2017 , the increases in production expenses of 15% and 9% , respectively, reflect higher costs associated with the increase in television licensing revenues and a higher investment in internally-produced television series. For the six months ended June 30, 2017 , these increases were partially offset by lower sports production costs as the first quarter of 2016 included CBS’s broadcast of Super Bowl 50 .

For the three and six months ended June 30, 2017 , the increases in participation, distribution and royalty costs of 2% and 6% , respectively, primarily reflect higher residuals resulting from the increase in television licensing revenues.

Selling, General and Administrative Expenses



	Three Months Ended June 30,
	2017		% of Revenues			2016		% of Revenues			Increase/(Decrease)
Selling, general and administrative expenses	$	528		16	%	$	510		17	%		4	%

- 39 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)



	Six Months Ended June 30,
	2017		% of Revenues			2016		% of Revenues			Increase/(Decrease)
Selling, general and administrative expenses	$	1,038		16	%	$	1,013		15	%		2	%

Selling, general and administrative (“SG&A”) expenses include expenses incurred for selling and marketing costs, occupancy and back office support. For the three and six months ended June 30, 2017 , the increases in SG&A expenses of 4% and 2% , respectively, primarily reflect higher advertising and marketing costs, mainly associated with the timing of series premieres and to support the Company’s growth initiatives.

Depreciation and Amortization



	Three Months Ended June 30,							Six Months Ended June 30,
	2017		2016		Increase/(Decrease)			2017		2016		Increase/(Decrease)
Depreciation and amortization	$	56	$	57		(2	)%	$	111	$	114		(3	)%

For the three and six months ended June 30, 2017 , the decreases in depreciation and amortization of 2% and 3% , respectively, were the result of intangibles and property and equipment that became fully amortized.

Other Operating Items, Net

For the six months ended June 30, 2016 , other operating items, net included a gain from the sale of an internet business in China and a multiyear, retroactive impact of a new operating tax.

Interest Expense/Income



	Three Months Ended June 30,									Six Months Ended June 30,
	2017			2016			Increase/(Decrease)			2017			2016			Increase/(Decrease)
Interest expense	$	(111	)	$	(100	)		11	%	$	(220	)	$	(200	)		10	%
Interest income	$	15		$	8			88	%	$	28		$	15			87	%

The following table presents the Company’s outstanding debt balances, excluding capital leases, and the weighted average interest rate as of June 30, 2017 and 2016 :



	At June 30,
			Weighted Average					Weighted Average
	2017		Interest Rate			2016		Interest Rate
Total long-term debt	$	8,853		4.47	%	$	8,167		4.61	%
Commercial paper	$	263		1.42	%	$	163		0.72	%

Other Items, Net



	Three Months Ended June 30,							Six Months Ended June 30,
	2017		2016			Increase/(Decrease)		2017		2016			Increase/(Decrease)
Other items, net	$	5	$	(4	)		n/m	$	6	$	(7	)		n/m

n/m - not meaningful

Other items, net for all periods primarily consists of foreign exchange gains and losses.

- 40 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Provision for Income Taxes

The provision for income taxes represents federal, state and local, and foreign taxes on earnings from continuing operations before income taxes and equity in loss of investee companies.



	Three Months Ended June 30,									Six Months Ended June 30,
	2017			2016			Increase/(Decrease)			2017			2016			Increase/(Decrease)
Provision for income taxes, including interest and before other discrete items	$	(176	)	$	(171	)		3	%	$	(361	)	$	(374	)		(3	)%
Excess tax benefits from stock-based compensation ^(a)	4			—						31			—
Other discrete items ^(b)	3			(2		)				23			(5		)
Provision for income taxes	$	(169	)	$	(173	)		(2	)%	$	(307	)	$	(379	)		(19	)%
Effective income tax rate	29.2		%	31.2		%				25.9		%	31.0		%

(b) For the six months ended June 30, 2017 , primarily reflects tax benefits from the resolution of certain state income tax matters.

Equity in Loss of Investee Companies, Net of Tax



	Three Months Ended June 30,									Six Months Ended June 30,
	2017			2016			Increase/(Decrease)			2017			2016			Increase/(Decrease)
Equity in loss of investee companies, net of tax	$	(12	)	$	(9	)		33	%	$	(29	)	$	(30	)		(3	)%

Net Earnings from Continuing Operations and Diluted EPS from Continuing Operations



	Three Months Ended June 30,							Six Months Ended June 30,
	2017		2016		Increase/(Decrease)			2017		2016		Increase/(Decrease)
Net earnings from continuing operations	$	397	$	373		6	%	$	851	$	815		4	%
Diluted EPS from continuing operations	$	.97	$	.82		18	%	$	2.06	$	1.78		16	%

For the three months ended June 30, 2017 , the 6% increase in net earnings from continuing operations was primarily the result of higher operating income. For the six months ended June 30, 2017 , the 4% increase in net earnings from continuing operations reflects the previously mentioned tax benefits, which were partially offset by lower operating income. In addition to the higher earnings, the increases in diluted EPS from continuing operations for the three and six months ended June 30, 2017 of 18% and 16% , respectively, reflect lower weighted average shares outstanding as a result of the Company’s ongoing share repurchase program.

- 41 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Net Earnings (Loss) from Discontinued Operations

The following table sets forth details of net earnings (loss) from discontinued operations for the three and six months ended June 30, 2017 and 2016 .



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenues	$	306		$	313		$	556		$	575
Costs and expenses:
Operating	105			103			194			188
Selling, general and administrative	129			122			251			236
Depreciation and amortization ^(a)	—			6			—			13
Restructuring charge	7			—			7			—
Provision for valuation allowance	365			—			1,080			—
Total costs and expenses	606			231			1,532			437
Operating income (loss)	(300		)	82			(976		)	138
Interest expense	(20		)	—			(39		)	—
Earnings (loss) from discontinued operations	(320		)	82			(1,015		)	138
Income tax provision	(19		)	(32		)	(30		)	(57		)
Net earnings (loss) from discontinued operations, net of tax	$	(339	)	$	50		$	(1,045	)	$	81

(a) CBS Radio has been classified as held for sale beginning in the fourth quarter of 2016. Under ASC 360, assets held for sale are not depreciated or amortized.

FASB Accounting Standards Codification (“ASC”) 360 requires that an asset classified as held for sale be measured each reporting period at the lower of its carrying amount or fair value less cost to sell. The ultimate value of the transaction with Entercom will be determined based on Entercom’s stock price at the closing of the transaction. The Company recorded noncash charges of $365 million and $1.08 billion for the three and six months ended June 30, 2017 , respectively, to record a valuation allowance to reduce the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom. In accordance with ASC 360, the valuation allowance will continue to be adjusted based on the trading price of Entercom’s stock, which could result in future gains or losses. A 10% change to Entercom’s stock price would change the carrying value of CBS Radio by approximately $100 million .

Net Earnings (Loss) and Diluted EPS



	Three Months Ended June 30,							Six Months Ended June 30,
	2017		2016		Increase/(Decrease)			2017			2016		Increase/(Decrease)
Net earnings (loss)	$	58	$	423		(86	)%	$	(194	)	$	896		(122	)%
Diluted EPS	$	.14	$	.93		(85	)%	$	(.47	)	$	1.95		(124	)%

- 42 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Segment Results of Operations

Three Months Ended June 30, 2017 and 2016



	Three Months Ended June 30,
				% of Total Revenues						% of Total Revenues			Increase/(Decrease)
	2017			% of Total Revenues			2016			% of Total Revenues			$			%
Revenues:
Entertainment	$	2,184			67	%	$	1,947			66	%	$	237		12	%
Cable Networks	571				18		536				18		35			7
Publishing	206				6		187				6		19			10
Local Media	412				13		396				13		16			4
Corporate/Eliminations	(116		)		(4	)	(90		)		(3	)	(26		)	(29	)
Total Revenues	$	3,257			100	%	$	2,976			100	%	$	281		9	%



	Three Months Ended June 30,
				% of Total Operating Income						% of Total Operating Income
													Increase/(Decrease)
	2017						2016						$			%
Segment Operating Income (Loss):
Entertainment	$	346			52	%	$	351			54	%	$	(5	)	(1	)%
Cable Networks	253				38		227				35		26			11
Publishing	28				4		26				4		2			8
Local Media	127				19		130				20		(3		)	(2	)
Corporate	(85		)		(13	)	(83		)		(13	)	(2		)	(2	)
Total Operating Income	$	669			100	%	$	651			100	%	$	18		3	%



	Three Months Ended June 30,
					Increase/(Decrease)
	2017		2016		$			%
Depreciation and Amortization:
Entertainment	$	27	$	30	$	(3	)	(10	)%
Cable Networks	6		5		1			20
Publishing	2		2		—			—
Local Media	12		11		1			9
Corporate	9		9		—			—
Total Depreciation and Amortization	$	56	$	57	$	(1	)	(2	)%

- 43 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Six Months Ended June 30, 2017 and 2016



	Six Months Ended June 30,
				% of Total Revenues						% of Total Revenues			Increase/(Decrease)
	2017			% of Total Revenues			2016			% of Total Revenues			$			%
Revenues:
Entertainment	$	4,531			69	%	$	4,534			69	%	$	(3	)	—	%
Cable Networks	1,114				17		1,061				16		53			5
Publishing	367				6		332				5		35			11
Local Media	821				12		844				13		(23		)	(3	)
Corporate/Eliminations	(233		)		(4	)	(207		)		(3	)	(26		)	(13	)
Total Revenues	$	6,600			100	%	$	6,564			100	%	$	36		1	%



	Six Months Ended June 30,
				% of Total Segment Operating Income						% of Total Segment Operating Income
													Increase/(Decrease)
	2017						2016						$			%
Segment Operating Income (Loss):
Entertainment	$	744			54	%	$	800			57	%	$	(56	)	(7	)%
Cable Networks	501				37		455				32		46			10
Publishing	42				3		39				3		3			8
Local Media	250				18		280				20		(30		)	(11	)
Corporate	(164		)		(12	)	(167		)		(12	)	3			2
Total Segment Operating Income	1,373				100	%	1,407				100	%	(34		)	(2	)
Other operating items, net	—						9						(9		)	n/m
Total Operating Income	$	1,373					$	1,416					$	(43	)	(3	)%

n/m - not meaningful



	Six Months Ended June 30,
					Increase/(Decrease)
	2017		2016		$			%
Depreciation and Amortization:
Entertainment	$	56	$	60	$	(4	)	(7	)%
Cable Networks	12		11		1			9
Publishing	3		3		—			—
Local Media	23		22		1			5
Corporate	17		18		(1		)	(6	)
Total Depreciation and Amortization	$	111	$	114	$	(3	)	(3	)%

- 44 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Entertainment (CBS Television Network, CBS Television Studios, CBS Studios International, CBS Television Distribution, CBS Interactive and CBS Films)

Three Months Ended June 30, 2017 and 2016



	Three Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Revenues	$	2,184		$	1,947		$	237		12	%
Segment Operating Income	$	346		$	351		$	(5	)	(1	)%
Segment Operating Income as a % of revenues	16		%	18		%
Depreciation and amortization	$	27		$	30		$	(3	)	(10	)%
Capital expenditures	$	24		$	24		$	—		—	%

For the three months ended June 30, 2017 , the 12% increase in revenues was driven by 38% growth in affiliate and subscription fees, led by higher station affiliation fees and growth from new initiatives, including CBS All Access and third-party live television streaming services. Content licensing and distribution revenues benefited from a higher volume of television licensing sales and grew 12% , despite the difficult comparison with the second quarter of 2016, which included international licensing sales of five Star Trek library series. Advertising revenues increased 6% , reflecting the broadcast of the semifinals and finals of the NCAA Tournament on the CBS Television Network in the second quarter of 2017, partially offset by a decline in non-sports advertising revenues.

For the three months ended June 30, 2017 , operating income decreased 1% , primarily driven by the mix of revenues, reflecting higher-margin revenues in the second quarter of 2016, including the licensing of Star Trek , and lower-margin revenues from the NCAA Tournament in the second quarter of 2017.

Six Months Ended June 30, 2017 and 2016



	Six Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Revenues	$	4,531		$	4,534		$	(3	)	—	%
Segment Operating Income	$	744		$	800		$	(56	)	(7	)%
Segment Operating Income as a % of revenues	16		%	18		%
Depreciation and amortization	$	56		$	60		$	(4	)	(7	)%
Capital expenditures	$	38		$	37		$	1		3	%

For the six months ended June 30, 2017 , revenues were comparable with the same prior-year period, despite the benefit in 2016 from the broadcast of Super Bowl 50 . Affiliate and subscription fees increased 33% , reflecting higher station affiliation fees and growth from new initiatives, including CBS All Access and third-party live television streaming services . Content licensing and distribution revenues grew 16% , led by higher domestic licensing sales and strong demand for the Company’s content internationally, due in part to increased investment in internally-produced series. These increases were partially offset by the benefit to 2016 from the sales of Star Trek library programming.

For the six months ended June 30, 2017 , the 7% decrease in operating income was mainly a result of higher-margin revenues in 2016.

- 45 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Cable Networks (Showtime Networks, CBS Sports Network and Smithsonian Networks)

Three Months Ended June 30, 2017 and 2016



	Three Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$		%
Revenues	$	571		$	536		$	35	7	%
Segment Operating Income	$	253		$	227		$	26	11	%
Segment Operating Income as a % of revenues	44		%	42		%
Depreciation and amortization	$	6		$	5		$	1	20	%
Capital expenditures	$	4		$	2		$	2	100	%

For the three months ended June 30, 2017 , the 7% increase in revenues was driven by higher affiliate and subscription fees, led by subscription growth for the Showtime digital streaming subscription offering. The revenue growth also reflects higher international television licensing sales of Showtime original series. As of June 30, 2017 , subscriptions totaled 73 million for Showtime Networks (including Showtime , The Movie Channel and Flix ), 52 million for CBS Sports Network and 31 million for Smithsonian Networks.

For the three months ended June 30, 2017 , the 11% increase in operating income primarily reflects revenue growth.

Cable Networks revenues for the third quarter of 2017 are expected to include revenues from the Floyd Mayweather/Conor McGregor pay-per-view boxing event.

Six Months Ended June 30, 2017 and 2016



	Six Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$		%
Revenues	$	1,114		$	1,061		$	53	5	%
Segment Operating Income	$	501		$	455		$	46	10	%
Segment Operating Income as a % of revenues	45		%	43		%
Depreciation and amortization	$	12		$	11		$	1	9	%
Capital expenditures	$	7		$	4		$	3	75	%

For the six months ended June 30, 2017 , the 5% increase in revenues reflects growth in affiliate and subscription fees, led by the Showtime digital streaming subscription offering. This growth was partially offset by the timing of television licensing sales of Showtime original series.

For the six months ended June 30, 2017 , the 10% increase in operating income was driven by growth in higher-margin revenues.

- 46 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Publishing ( Simon & Schuster )

Three Months Ended June 30, 2017 and 2016



	Three Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Revenues	$	206		$	187		$	19		10	%
Segment Operating Income	$	28		$	26		$	2		8	%
Segment Operating Income as a % of revenues	14		%	14		%
Depreciation and amortization	$	2		$	2		$	—		—	%
Capital expenditures	$	—		$	3		$	(3	)	n/m

n/m - not meaningful

For the three months ended June 30, 2017 , the 10% increase in revenues was driven by higher print book sales and growth in digital audio sales. Best-selling titles in the second quarter of 2017 included Lord of Shadows by Cassandra Clare and I Can’t Make This Up by Kevin Hart .

For the three months ended June 30, 2017 , the 8% increase in operating income mainly reflects revenue growth.

Six Months Ended June 30, 2017 and 2016



	Six Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Revenues	$	367		$	332		$	35		11	%
Segment Operating Income	$	42		$	39		$	3		8	%
Segment Operating Income as a % of revenues	11		%	12		%
Depreciation and amortization	$	3		$	3		$	—		—	%
Capital expenditures	$	1		$	6		$	(5	)	(83	)%

For the six months ended June 30, 2017 , the 11% increase in revenues was driven by higher print book sales and growth in digital audio sales.

For the six months ended June 30, 2017 , the 8% increase in operating income reflects the revenue growth, which was partially offset by higher production and selling costs.

- 47 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Local Media ( CBS Television Stations and CBS Local Digital Media )

Three Months Ended June 30, 2017 and 2016



	Three Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Revenues	$	412		$	396		$	16		4	%
Segment Operating Income	$	127		$	130		$	(3	)	(2	)%
Segment Operating Income as a % of revenues	31		%	33		%
Depreciation and amortization	$	12		$	11		$	1		9	%
Capital expenditures	$	7		$	4		$	3		75	%

For the three months ended June 30, 2017 , the 4% increase in revenues was driven by growth in retransmission revenues. Advertising revenues benefited from CBS’s broadcast of the semifinals and finals of the NCAA Tournament in the second quarter of 2017; however, advertising revenues decreased 2% mainly due to lower political advertising sales.

For the three months ended June 30, 2017 , the 2% decrease in operating income mainly reflects the mix of revenues. Retransmission revenues have associated network affiliation costs paid to the CBS Television Network, whereas political advertising sales have a high operating income margin.

During the second half of 2017, the revenue comparison will continue to be negatively impacted by the benefit in 2016 from strong political advertising associated with U.S. federal and state elections.

Six Months Ended June 30, 2017 and 2016



	Six Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Revenues	$	821		$	844		$	(23	)	(3	)%
Segment Operating Income	$	250		$	280		$	(30	)	(11	)%
Segment Operating Income as a % of revenues	30		%	33		%
Depreciation and amortization	$	23		$	22		$	1		5	%
Capital expenditures	$	12		$	11		$	1		9	%

For the six months ended June 30, 2017 , the 3% decrease in revenues was driven by lower advertising revenues, reflecting the benefit in 2016 from CBS’s broadcast of Super Bowl 50, and a decline in political advertising sales. The lower advertising revenues were partially offset by growth in retransmission revenues.

For the six months ended June 30, 2017 , the 11% decrease in operating income primarily reflects the lower revenues, as well as the mix of revenues compared to the same prior-year period.

- 48 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Corporate

Three Months Ended June 30, 2017 and 2016



	Three Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Segment Operating Loss	$	(85	)	$	(83	)	$	(2	)	(2	)%
Depreciation and amortization	$	9		$	9		$	—		—	%
Capital expenditures	$	6		$	2		$	4		200	%

Six Months Ended June 30, 2017 and 2016



	Six Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Segment Operating Loss	$	(164	)	$	(167	)	$	3		2	%
Depreciation and amortization	$	17		$	18		$	(1	)	(6	)%
Capital expenditures	$	10		$	11		$	(1	)	(9	)%

Corporate expenses include general corporate overhead, unallocated shared company expenses, pension and postretirement benefit costs for plans retained by the Company for previously divested businesses, and intercompany eliminations.

Financial Position



	At			At			Increase/(Decrease)
	June 30, 2017			December 31, 2016			$			%
Current Assets:
Cash and cash equivalents		$	170		$	598	$	(428	)	(72	)%
Receivables, net		3,299			3,314		(15		)	—
Programming and other inventory ^(a)		1,560			1,427		133			9
Prepaid expenses		132			185		(53		)	(29	)
All other current assets		525			539		(14		)	(3	)
Total current assets		$	5,686		$	6,063	$	(377	)	(6	)%

(a) The increase mainly reflects the timing of payments for sports programming.



	At			At			Increase/(Decrease)
	June 30, 2017			December 31, 2016			$			%
Other assets ^(a)		$	2,558		$	2,707	$	(149	)	(6	)%

(a) The decrease primarily reflects lower long-term receivables associated with revenues from television licensing agreements.

- 49 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)



	At			At			Increase/(Decrease)
	June 30, 2017			December 31, 2016			$			%
Assets of discontinued operations ^(a)		$	3,218		$	4,291	$	(1,073	)	(25	)%

(a) The decrease primarily reflects a noncash charge of $1.08 billion to record a valuation allowance to reduce the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom. (See Note 3 to the consolidated financial statements).



	At			At			Increase/(Decrease)
	June 30, 2017			December 31, 2016			$			%
Current Liabilities:
Accounts payable		$	124		$	148	$	(24	)	(16	)%
Accrued compensation ^(a)		223			369		(146		)	(40	)
Participants’ share and royalties payable		1,005			1,024		(19		)	(2	)
Commercial paper		263			450		(187		)	(42	)
All other current liabilities		1,615			1,717		(102		)	(6	)
Total current liabilities		$	3,230		$	3,708	$	(478	)	(13	)%

(a) The decrease is due to the timing of payments.



	At			At			Increase/(Decrease)
	June 30, 2017			December 31, 2016			$			%
Pension and postretirement benefit obligations ^(a)		$	1,638		$	1,769	$	(131	)	(7	)%

(a) The decrease primarily reflects discretionary pension contributions of $100 million made during the first quarter of 2017 to prefund the Company’s qualified plans.

Cash Flows

The changes in cash and cash equivalents were as follows:



	Six Months Ended June 30,
	2017			2016			Increase/(Decrease)
Net cash flow provided by operating activities from:
Continuing operations	$	909		$	1,139			$	(230	)
Discontinued operations	29			112				(83		)
Net cash flow provided by operating activities	938			1,251				(313		)
Net cash flow used for investing activities from:
Continuing operations	(139		)	(140		)		1
Discontinued operations	(13		)	(2		)		(11		)
Net cash flow used for investing activities	(152		)	(142		)		(10		)
Net cash flow used for financing activities	(1,229		)	(1,256		)		27
Net decrease in cash and cash equivalents	$	(443	)	$	(147	)		$	(296	)

Operating Activities. For the six months ended June 30, 2017 , the decrease in cash provided by operating activities was driven by the benefit in 2016 from CBS’s broadcast of Super Bowl 50 , and discretionary pension contributions of $100 million made during the first quarter of 2017 to prefund the Company’s qualified plans. These decreases were partially offset by higher affiliate and subscription fee revenues.

- 50 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Investing Activities



	Six Months Ended June 30,
	2017				2016
Acquisitions ^(a)		$	(21	)		$	(51	)
Capital expenditures		(68		)		(69		)
Investments in and advances to investee companies ^(b)		(65		)		(43		)
Proceeds from dispositions ^(c)		1				19
Other investing activities		14				4
Net cash flow used for investing activities from continuing operations		(139		)		(140		)
Net cash flow used for investing activities from discontinued operations		(13		)		(2		)
Net cash flow used for investing activities		$	(152	)		$	(142	)

(a) 2016 reflects the acquisition of a sports-focused digital media business.

(b) Mainly includes the Company’s investment in The CW as well as its other domestic and international television joint ventures.

Financing Activities



	Six Months Ended June 30,
	2017				2016
Repurchase of CBS Corp. Class B Common Stock		$	(845	)		$	(1,033	)
(Repayments of) proceeds from short-term debt borrowings, net		(187		)		163
Repayment of senior debentures		—				(199		)
Dividends		(151		)		(142		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation		(89		)		(57		)
Proceeds from exercise of stock options		39				10
All other financing activities, net		4				2
Net cash flow used for financing activities		$	(1,229	)		$	(1,256	)

Free Cash Flow

Free cash flow is a non-GAAP financial measure. Free cash flow reflects the Company’s net cash flow provided by (used for) operating activities before operating cash flow from discontinued operations and less capital expenditures. The Company’s calculation of free cash flow includes capital expenditures because investment in capital expenditures is a use of cash that is directly related to the Company’s operations. The Company’s net cash flow provided by (used for) operating activities is the most directly comparable GAAP financial measure.

Management believes free cash flow provides investors with an important perspective on the cash available to the Company to service debt, make strategic acquisitions and investments, maintain its capital assets, satisfy its tax obligations, and fund ongoing operations and working capital needs. As a result, free cash flow is a significant measure of the Company’s ability to generate long-term value. It is useful for investors to know whether this ability is being enhanced or degraded as a result of the Company’s operating performance. The Company believes the presentation of free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from the Company’s underlying operations in a manner similar to the method used by management. Free cash flow is one of several components of incentive compensation targets for certain management personnel. In addition, free cash flow is a primary measure used externally by the Company’s investors, analysts and industry

- 51 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

peers for purposes of valuation and comparison of the Company’s operating performance to other companies in its industry.

As free cash flow is not a measure calculated in accordance with GAAP, free cash flow should not be considered in isolation of, or as a substitute for, either net cash flow provided by (used for) operating activities as a measure of liquidity or net earnings (loss) as a measure of operating performance. Free cash flow, as the Company calculates it, may not be comparable to similarly titled measures employed by other companies. In addition, free cash flow as a measure of liquidity has certain limitations, does not necessarily represent funds available for discretionary use and is not necessarily a measure of the Company’s ability to fund its cash needs. When comparing free cash flow to net cash flow provided by (used for) operating activities, the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions that are not reflected in free cash flow.

The following table presents a reconciliation of the Company’s net cash flow provided by operating activities to free cash flow.



	Six Months Ended
	June 30,
	2017			2016
Net cash flow provided by operating activities	$	938		$	1,251
Capital expenditures	(68		)	(69		)
Exclude operating cash flow from discontinued operations	29			112
Free cash flow	$	841		$	1,070

Repurchase of Company Stock and Cash Dividends

- 52 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Capital Structure

The following table sets forth the Company’s debt.



	At			At
	June 30, 2017			December 31, 2016
Commercial paper		$	263		$	450
Senior debt (1.95% – 7.875% due 2017 – 2045) ^(a)		8,853			8,850
Obligations under capital leases		68			75
Total debt		9,184			9,375
Less commercial paper		263			450
Less current portion of long-term debt		23			23
Total long-term debt, net of current portion		$	8,898		$	8,902

Commercial Paper

Credit Facility

- 53 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Liquidity and Capital Resources

The Company continually projects anticipated cash requirements for its operating, investing and financing needs as well as cash flows generated from operating activities available to meet these needs. The Company’s operating needs include, among other items, commitments for sports programming rights, television and film programming, talent contracts, operating leases, interest payments, and pension funding obligations. The Company’s investing and financing spending includes capital expenditures, share repurchases, dividends and principal payments on its outstanding indebtedness. The Company believes that its operating cash flows; cash and cash equivalents; borrowing capacity under the Credit Facility, which had $2.49 billion of remaining availability at June 30, 2017 ; and access to capital markets are sufficient to fund its operating, investing and financing requirements for the next twelve months.

The Company’s funding for short-term and long-term obligations will come primarily from cash flows from operating activities. Any additional cash funding requirements are financed with short-term borrowings, including commercial paper, and long-term debt. To the extent that commercial paper is not available to the Company, the existing Credit Facility provides sufficient capacity to satisfy short-term borrowing needs. The Company routinely assesses its capital structure and opportunistically enters into transactions to lower its interest expense, which could result in a charge from the early extinguishment of debt.

Subsequent to the refinancing of $700 million of debt in July 2017, the Company’s long-term debt obligations due over the next five years of $2.10 billion is expected to be funded by cash generated from operating activities and the Company’s ability to refinance its debt.

Legal Matters

- 54 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

report as pending those claims on inactive, stayed, deferred or similar dockets which some jurisdictions have established for claimants who allege minimal or no impairment. As of June 30, 2017 , the Company had pending approximately 33,240 asbestos claims, as compared with approximately 33,610 as of December 31, 2016 and 34,790 as of June 30, 2016 . During the second quarter of 2017 , the Company received approximately 1,030 new claims and closed or moved to an inactive docket approximately 1,390 claims. The Company reports claims as closed when it becomes aware that a dismissal order has been entered by a court or when the Company has reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the claims, the quality of evidence supporting the claims and other factors. In 2016 , the Company’s costs for settlement and defense of asbestos claims after insurance and taxes were approximately $48 million . In 2015 , as the result of an insurance settlement, insurance recoveries exceeded the Company’s after tax costs for settlement and defense of asbestos claims by approximately $5 million . The Company’s costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses.

Filings include claims for individuals suffering from mesothelioma, a rare cancer, the risk of which is allegedly increased by exposure to asbestos; lung cancer, a cancer which may be caused by various factors, one of which is alleged to be asbestos exposure; other cancers, and conditions that are substantially less serious, including claims brought on behalf of individuals who are asymptomatic as to an allegedly asbestos-related disease. The predominant number of claims against the Company are non-cancer claims. The Company believes that its reserves and insurance are adequate to cover its asbestos liabilities. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims. While the number of asbestos claims filed against the Company has remained generally flat in recent years, it is difficult to predict future asbestos liabilities, as events and circumstances may occur including, among others, the number and types of claims and average cost to resolve such claims, which could affect the Company’s estimate of its asbestos liabilities.

Related Parties

See Note 5 to the consolidated financial statements.

Recent Pronouncements and Adoption of New Accounting Standards

See Note 1 to the consolidated financial statements.

Critical Accounting Policies

See Item 7, Management’s Discussion and Analysis of Results of Operations and Financial Condition in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , for a discussion of the Company’s critical accounting policies.

- 55 -

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Cautionary Statement Concerning Forward-Looking Statements

This quarterly report on Form 10-Q, including “Item 2 - Management’s Discussion and Analysis of Results of Operations and Financial Condition,” contains both historical and forward‑looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward‑looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. These forward‑looking statements are not based on historical facts, but rather reflect the Company’s current expectations concerning future results and events. These forward-looking statements generally can be identified by the use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “may,” “could,” or other similar words or phrases. Similarly, statements that describe the Company’s objectives, plans or goals are or may be forward‑looking statements. These forward‑looking statements involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause the actual results, performance or achievements of the Company to be different from any future results, performance and achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among others: advertising market conditions generally; changes in the public acceptance of the Company’s content; changes in technology and its effect on competition in the Company’s markets; changes in the federal communications laws and regulations; the impact of piracy on the Company’s products; the impact of consolidation in the market for the Company’s content; the impact of negotiations or the loss of affiliation agreements or retransmission agreements; the impact of union activity, including possible strikes or work stoppages or the Company’s inability to negotiate favorable terms for contract renewals; the ability to achieve the separation of the Company’s radio business through a merger of CBS Radio with a subsidiary of Entercom Communications Corp. on the anticipated terms, which is subject to regulatory and Entercom stockholder approvals, an exchange offer and other customary closing conditions, and fluctuations in the market values of Entercom’s Class A common stock and the Company’s Class B Common Stock; other domestic and global economic, business, competitive and/or regulatory factors affecting the Company’s businesses generally; and other factors described in the Company’s filings made under the securities laws, including, among others, those set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in our Quarterly Reports on Form 10-Q, and in the Company’s recent Current Reports on Form 8-K. There may be additional risks, uncertainties and factors that the Company does not currently view as material or that are not necessarily known. The forward‑looking statements included in this document are made as of the date of this document and the Company does not have any obligation to publicly update any forward‑looking statements to reflect subsequent events or circumstances.



Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes to market risk since reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 .



Item 4.	Controls and Procedures.

The Company’s chief executive officer and chief operating officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended) were effective, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Securities Exchange Act of 1934, as amended.

No change in the Company’s internal control over financial reporting occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 56 -

PART II – OTHER INFORMATION



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

Company Purchases of Equity Securities

In November 2010, the Company announced that its Board of Directors approved a program to repurchase $1.5 billion of the Company’s common stock in open market purchases or other types of transactions (including accelerated stock repurchases or privately negotiated transactions). Since then, various increases totaling $16.4 billion have been approved and announced, including most recently, an increase to the share repurchase program to a total availability of $6.0 billion on July 28, 2016. Below is a summary of CBS Corp.’s purchases of its Class B Common Stock during the three months ended June 30, 2017 under this publicly announced share repurchase program.



(in millions, except per share amounts)	Total Number of Shares Purchased		Average Price Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Remaining Authorization
April 1, 2017 - April 30, 2017		1.1	$	67.74		1.1		$	3,529
May 1, 2017 - May 31, 2017		1.7	$	62.57		1.7		$	3,426
June 1, 2017 - June 30, 2017		1.9	$	62.10		1.9		$	3,307
Total		4.7	$	63.64		4.7		$	3,307

- 57 -



Item 6.	Exhibits.



Exhibit No.			Description of Document
(2	)		Plan of acquisition, reorganization, arrangement, liquidation or succession.
		(a)	Amendment No. 1, dated as of July 10, 2017 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of CBS Corporation filed July 10, 2017 (File No. 001-09553)), to Agreement and Plan of Merger, dated as of February 2, 2017, by and among CBS Corporation, CBS Radio Inc., Entercom Communications Corp. and Constitution Merger Sub Corp. (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K of CBS Corporation filed February 2, 2017 (File No. 001-09553)).
(4	)		Instruments defining the rights of security holders, including indentures.
		(a)	Amended and Restated Senior Indenture dated as of November 3, 2008 (“2008 Indenture”) between CBS Corporation, CBS Operations Inc., and The Bank of New York Mellon, as senior trustee (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 of CBS Corporation filed November 3, 2008 (Registration No. 333-154962) (File No. 001-09553)).
		(b)	First Supplemental Indenture to 2008 Indenture dated as of April 5, 2010 between CBS Corporation, CBS Operations Inc., and Deutsche Bank Trust Company Americas, as senior trustee (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K of CBS Corporation filed April 5, 2010 (File No. 001-09553)).
			The other instruments defining the rights of holders of the long-term debt securities of CBS Corporation and its subsidiaries are omitted pursuant to section (b)(4)(iii)(A) of Item 601 of Regulation S-K. CBS Corporation hereby agrees to furnish copies of these instruments to the Securities and Exchange Commission upon request.
(10)			Material Contracts
		(a)	Employment Agreement dated May 19, 2017 between CBS Corporation and Leslie Moonves (filed herewith).
(12	)		Statement Regarding Computation of Ratios (filed herewith)
(31	)		Rule 13a-14(a)/15d-14(a) Certifications
		(a)	Certification of the Chief Executive Officer of CBS Corporation pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
		(b)	Certification of the Chief Operating Officer of CBS Corporation pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
(32	)		Section 1350 Certifications
		(a)	Certification of the Chief Executive Officer of CBS Corporation furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
		(b)	Certification of the Chief Operating Officer of CBS Corporation furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
(101	)		Interactive Data File
			101. INS XBRL Instance Document.
			101. SCH XBRL Taxonomy Extension Schema.
			101. CAL XBRL Taxonomy Extension Calculation Linkbase.
			101. DEF XBRL Taxonomy Extension Definition Linkbase.
			101. LAB XBRL Taxonomy Extension Label Linkbase.
			101. PRE XBRL Taxonomy Extension Presentation Linkbase.

- 58 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	CBS CORPORATION (Registrant)

Date: August 7, 2017	/s/ Joseph R. Ianniello
	Joseph R. Ianniello Chief Operating Officer

Date: August 7, 2017	/s/ Lawrence Liding
	Lawrence Liding Executive Vice President, Controller and Chief Accounting Officer

- 59 -

EXHIBIT INDEX



Exhibit No.			Description of Document
(2	)		Plan of acquisition, reorganization, arrangement, liquidation or succession.
		(a)	Amendment No. 1, dated as of July 10, 2017 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of CBS Corporation filed July 10, 2017 (File No. 001-09553)), to Agreement and Plan of Merger, dated as of February 2, 2017, by and among CBS Corporation, CBS Radio Inc., Entercom Communications Corp. and Constitution Merger Sub Corp. (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K of CBS Corporation filed February 2, 2017 (File No. 001-09553)).
(4	)		Instruments defining the rights of security holders, including indentures.
		(a)	Amended and Restated Senior Indenture dated as of November 3, 2008 (“2008 Indenture”) between CBS Corporation, CBS Operations Inc., and The Bank of New York Mellon, as senior trustee (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 of CBS Corporation filed November 3, 2008 (Registration No. 333-154962) (File No. 001-09553)).
		(b)	First Supplemental Indenture to 2008 Indenture dated as of April 5, 2010 between CBS Corporation, CBS Operations Inc., and Deutsche Bank Trust Company Americas, as senior trustee (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K of CBS Corporation filed April 5, 2010 (File No. 001-09553)).
			The other instruments defining the rights of holders of the long-term debt securities of CBS Corporation and its subsidiaries are omitted pursuant to section (b)(4)(iii)(A) of Item 601 of Regulation S-K. CBS Corporation hereby agrees to furnish copies of these instruments to the Securities and Exchange Commission upon request.
(10	)		Material Contracts
		(a)	Employment Agreement dated May 19, 2017 between CBS Corporation and Leslie Moonves (filed herewith).
(12	)		Statement Regarding Computation of Ratios (filed herewith)
(31	)		Rule 13a-14(a)/15d-14(a) Certifications
		(a)	Certification of the Chief Executive Officer of CBS Corporation pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
		(b)	Certification of the Chief Operating Officer of CBS Corporation pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
(32	)		Section 1350 Certifications
		(a)	Certification of the Chief Executive Officer of CBS Corporation furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
		(b)	Certification of the Chief Operating Officer of CBS Corporation furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
(101	)		Interactive Data File
			101. INS XBRL Instance Document.
			101. SCH XBRL Taxonomy Extension Schema.
			101. CAL XBRL Taxonomy Extension Calculation Linkbase.
			101. DEF XBRL Taxonomy Extension Definition Linkbase.
			101. LAB XBRL Taxonomy Extension Label Linkbase.
			101. PRE XBRL Taxonomy Extension Presentation Linkbase.

- 60 -

Exhibit 10(a)

EXECUTION COPY

Mr. Leslie Moonves

c/o CBS Corporation

51 West 52nd Street

New York, NY 10019



Dear Mr. Moonves:	May 19, 2017

CBS Corporation (“ Employer ” and, together with its subsidiaries, the “ Company ”), having an address at 51 West 52nd Street, New York, New York 10019, agrees to continue to employ you and you agree to accept such continued employment upon the following terms and conditions set forth in this agreement (this “ Agreement ”). The parties hereto acknowledge and agree that this Agreement supersedes your existing employment agreement between Employer and you dated December 11, 2014, as amended on February 24, 2016 and February 26, 2016 (together, the “ Prior Agreement ”).

1. Term . The term of your employment hereunder shall commence on May 19, 2017 (the “ Start Date ”) and shall end on the earliest of (i) June 30, 2021, (ii) the date on which your employment is terminated by Employer or you pursuant to paragraph 10 or (iii) the date of your death or the date of termination of your employment by reason of incapacity (determined in accordance with paragraph 9) (the “ Employment Term ”). The period from the Start Date until June 30, 2021, regardless of any earlier termination, shall hereinafter be referred to as the “ Original Employment Term .”

2. Titles and Authority .

(a) Officer Positions and Reporting Lines . During the Employment Term, you will have the title of Chairman of the Board, President and Chief Executive Officer of Employer and will have the powers, responsibilities, duties and authority customary for the Chairman of the Board, President and Chief Executive Officers of corporations of the size, type and nature of the Company, including, without limitation, those powers, responsibilities, duties and authority you had immediately prior to the Start Date and those subsequently acquired. During the Employment Term, you will report solely and directly to the Board of Directors of Employer (the “ Board ”). During the Employment Term, you shall be the highest ranking executive of the Company ( i.e., there shall be no executive of equal or higher ranking). During the Employment Term, your duties shall include all of your duties as of the Start Date and those subsequently acquired, including the public positioning of the Company, and you shall have the sole authority to cause any Company business unit or operating division head, any executive officer of the Company and/or any other employee of the Company, to report directly to you or another executive officer of Employer, subject to any applicable employment agreement now existing with such head or executive officer which requires them to report directly to you or to your titled position. For the sake of clarity and avoidance of doubt,

your powers, responsibilities, duties and authority existing immediately prior to the Start Date shall extend to cover and include those powers, responsibilities, duties and authority necessary for your continued management of the Company each day during the Original Employment Term in a manner that is completely consistent with the operational and administrative protocols that you historically have enjoyed during your tenure as Chairman of the Board, which ability the parties mutually acknowledge and agree has been instrumental in your demonstrated capability to consistently focus on the strategic execution of the Company’s initiatives and successfully lead the Company.

(b) Service on the Board and with Subsidiaries . You currently serve as the Chairman of the Board. During the Employment Term, the Board will nominate you for reelection to the Board in the Chairman role at the expiration of each term of office, and you agree to serve as a member of the Board and in the Chairman role for each period for which you are so elected. You shall, subject to your election as such from time to time and subject to your approval, and without additional compensation, serve during the Employment Term in such additional offices of comparable or greater stature and responsibility in the subsidiaries of Employer and as a member of any committee of the Board or of the board of directors of any of Employer’s subsidiaries, to which you may be elected, as approved by you, from time to time.

(c) Full-Time Services and Other Activities . During the Employment Term, you agree to devote your entire business time, attention and energies to the business of the Company, except for vacations, illness or incapacity. However, nothing in this Agreement shall preclude you from serving as a member of the board of directors of any charitable, educational, religious, entertainment industry trade, public interest or public service organization, in each instance not inconsistent with the business practices and policies of the Company, or from devoting reasonable periods of time to the activities of the aforementioned organizations or from managing your personal investments, provided that such activities do not materially interfere with the performance of your duties and responsibilities hereunder. Except for your service on (i) the Board, (ii) the board of directors of Employer subsidiaries, (iii) the board of directors or similar governing body of your family foundation and of any other entity all of the beneficial interests of which are owned by you and/or members of your family or (iv) the board of directors of an organization as permitted by the immediately preceding sentence, you shall not serve on the board of directors or similar governing body of any business company or other business entity, excluding those on which you were already elected to serve as of the Start Date, without the prior consent of the Nominating and Governance Committee of Employer (or any successor to such committee).

(d) Location . During the Employment Term, consistent with current and past practice, you shall render your services under this Agreement from Employer’s executive offices in either the New York metropolitan area or the Los Angeles metropolitan area, except for services rendered during business trips as may be reasonably necessary. You shall not be required to relocate outside of either the New York metropolitan area or the Los Angeles metropolitan area.

3. Cash Compensation .

(a) Salary . During the Employment Term, Employer shall pay you a base salary at the annual rate of Three Million Five Hundred Thousand Dollars ($3,500,000) per annum. The Compensation Committee of the Board (the “ Compensation Committee ”) will review your salary at least annually and may increase (but not decrease, including from a level to which it was increased following the Start Date) the base salary. The result of any such annual review shall be reported to you by the Compensation Committee promptly after it occurs. The amount of annual base salary actually paid to you will be reduced to the extent you elect to defer such salary under the terms of any deferred compensation or savings plan or arrangement maintained or established by Employer. Your annual base salary payable hereunder, without reduction for any amounts deferred as described in the preceding sentence, is referred to herein as the “ Salary .” Employer shall pay the portion of the Salary not deferred at your election in accordance with its generally applicable payroll practices for senior executives of Employer, but not less frequently than in equal monthly installments.

Your Deferred Compensation, as defined in your prior employment agreement with the Employer dated July 1, 2004, shall continue to periodically be credited (or debited) with deemed positive (or negative) return calculated in the same manner, and at the same times, as the deemed return on your account under Employer’s Excess 401(k) Plan for Designated Senior Executives (as such plan may be amended from time to time, the “ Excess 401(k) Plan ”) is determined (it being understood and agreed that, if at any time during which the Deferred Compensation remains payable, your account balance in the Excess 401(k) Plan is distributed in full to you, your Deferred Compensation account shall continue to be credited or debited with a deemed return based on the investment portfolio in which your Excess 401(k) Plan account was notionally invested immediately prior to its distribution). Deferred Compensation shall be paid to you in a lump sum within 30 days following the end of the Employment Term. Employer’s obligation to pay the Deferred Compensation (including the return thereon provided for in this paragraph) shall be an unfunded obligation to be satisfied from the general funds of Employer.

(b) Annual Bonus Compensation . In addition to your Salary, during the Employment Term you shall be eligible to earn an annual bonus for each whole or partial calendar year during the Employment Term, determined and payable as follows (the “ Bonus ”):

(i)

Your target bonus for each calendar year during the Employment Term shall be $20,000,000 (not including any “Creative Bonus” (as defined herein) that may be determined and paid to you as described in paragraph 3(b)(iv) below), provided that the Compensation Committee will review your target bonus at least annually and may increase (but not decrease, including from a level to which it was increased following the Start Date) the target bonus. The result of any such annual review shall be reported to you by the Compensation Committee promptly after it occurs.

Your target bonus, as it may be so increased from time to time, is referred to herein as the “ Target Bonus .” As the actual amount payable to you as Bonus will be dependent, among other things, upon the achievement of the performance goal(s) referred to in paragraph 3(b)(ii), your actual Bonus may be less than, greater than or equal to the Target Bonus.

(ii)

A portion of your Bonus (the “ Company-Wide Performance Bonus Portion ”) for each calendar year during the Employment Term, beginning with 2017, will be based upon achievement of the target goal established in good faith by the Compensation Committee (the “ Company-Wide Performance Goal(s) ”) with regard to the financial based portion of Employer’s Short-Term Incentive Program for such calendar year (the “ Short-Term Incentive Program ”); provided , however , that you acknowledge that the Company-Wide Performance Goals applicable to your Bonus for calendar year 2017 have already been established in a manner that complies with this Agreement and, for the partial calendar year in 2021, the applicable performance goal(s) shall be adjusted to reflect budgeted Company performance for the shortened performance period and the performance period shall end coincident with the end of the Original Employment Term. The Company-Wide Performance Goal(s) shall satisfy the following requirements (the “ Incentive Goal Parameters ”):


(a)	The Company-Wide Performance Goal(s) shall be no more difficult than the performance goal(s) established for the purpose of determining the amount of any actual bonus payable to any other executive of Employer who participates in the Short-Term Incentive Program and who has Company-wide responsibilities;


(b)	The Company-Wide Performance Goal(s) will be challenging, but reasonably achievable; and

(c)

For each calendar year, the level of difficulty in achieving the Company-Wide Performance Goal(s) for that calendar year will not be significantly more difficult (as determined at the time such Company-Wide Performance Goal(s) are established, taking into account all relevant facts and circumstances, including the Company’s relative financial and stock performance, general market conditions and market conditions affecting diversified media and entertainment companies) than was the level of difficulty of achieving the Company-Wide Performance Goal(s) applicable to the immediately preceding calendar year. For avoidance of doubt, the fact that the target with respect to

Company-Wide Performance Goal(s) increases from one year to the following year shall not be presumed, in and of itself, to mean that such Company-Wide Performance Goal(s) for the calendar year are significantly more difficult to attain than the Company-Wide Performance Goal(s) for the immediately preceding calendar year.

You shall have meaningful input with the Compensation Committee prior to the determination of the Company-Wide Performance Goal(s) for each calendar year, but the Compensation Committee will have final power and authority concerning the establishment of such goal(s).


(iii)	With respect to the Company-Wide Performance Bonus Portion:


•	If the Company achieves less than 80% of the Company-Wide Performance Goal(s) for the calendar year (or portion thereof), you shall not have a right to payment of any Bonus with respect to the Company-Wide Performance Bonus Portion;


•	If the Company achieves 80% of the Company-Wide Performance Goal(s) for the calendar year (or portion thereof), the Company-Wide Performance Bonus Portion shall be an amount in U.S. Dollars of no less than seventy five percent (75%) of the Target Bonus;


•	If the Company achieves 100% of the Company-Wide Performance Goal(s) for the calendar year (or portion thereof), the Company-Wide Performance Bonus Portion shall be an amount in U.S. Dollars of no less than the Target Bonus;


•	If the Company achieves 108% or more of the Company-Wide Performance Goal(s) for the calendar year (or portion thereof), the Company-Wide Performance Bonus Portion shall be an amount in U.S. Dollars of no less than 133.33% of the Target Bonus; and


•	For achievement at an intermediate point between 80% and 100%, or between 100% and 108% (each such percentage, an “ Achievement Percentage ”), the Company-Wide Performance Bonus Portion will be interpolated on a straight-line basis between the respective percentages of the Target Bonus to be delivered at such Achievement Percentages (each, a “ Payout Percentage ”).

The parties acknowledge and agree that, beginning with the 2018 calendar year, the Achievement Percentages and Payout Percentages in the schedule above shall be modified to reflect the funding design for Employer’s Short-Term Incentive Program approved by the Compensation Committee for each such calendar year.

Notwithstanding anything herein to the contrary, the Compensation Committee shall not be precluded from authorizing the payment to you of a Bonus which exceeds the Company-Wide Performance Bonus Portion determined under the above schedule.

(iv)

In addition to the Company-Wide Performance Bonus Portion, the remainder of your Bonus ( i.e., the qualitative portion of your Bonus) shall be determined in the reasonable discretion of the Compensation Committee taking into account all relevant factors, including individual and other performance goals. Additionally, with respect to each of the 2017, 2018, 2019, 2020 and 2021 calendar years, the Compensation Committee shall consider special recognition of your leadership and direction in the creation of premium content across Employer’s portfolio of businesses, and in good faith consider awarding an annual “Creative Bonus” in its reasonable discretion and consistent with past practice with respect to the deliberations regarding, but not the amount of, your Creative Bonus. The Chair of the Compensation Committee shall communicate to you the Compensation Committee’s rationale with respect to the Creative Bonus it determines to award to you for any calendar year (or if no Creative Bonus is awarded to you, the Compensation Committee’s rationale for deciding not to award you a Creative Bonus) promptly following its decision.


(v)	Your Bonus for the 2017 calendar year shall not be subject to any proration notwithstanding the Start Date of this Agreement. For the partial year 2021, your annual Target Bonus shall be prorated to reflect the shorter performance period.

(vi)

Subject to any deferral election, your Bonus (including any portion which exceeds the amount determined to be the Company-Wide Performance Bonus Portion) for each calendar year shall be paid in cash, shares of CBS Corporation Class B Common Stock (“ Class B Common Stock ”) or a combination of cash and Class B Common Stock during the period January 1 ^st through February 28 ^th of the following calendar year (provided that any Bonus for the partial year 2021 shall be payable during the period July 1 ^st through September 30 ^th of such year), and in accordance with the terms of Employer’s Senior Executive Short-Term Incentive Plan, as the same may be amended from time to time (together with any

successor plan, the “ Senior Executive STIP ”) (provided that if the Compensation Committee determines in its discretion to pay you a Bonus that exceeds the maximum amount payable under the Senior Executive STIP for any calendar year, such excess amount shall also be paid in cash, Class B Common Stock or a combination of cash and Class B Common Stock at the same time as the rest of your Bonus is paid). For the avoidance of doubt, it is understood that you will receive the Bonus that is determined by the Compensation Committee for you for each calendar year (or, in the case of the partial year 2021, such shorter performance period) completed while you are employed, even if you are not employed on the date bonuses are paid for such performance period.


(vii)	In the event that the current Senior Executive STIP is amended or terminated, you will be given an opportunity under the amended or successor plan to earn bonus compensation equivalent to the amount that you could have earned under this paragraph 3(b), but subject to the same limitations, and any such bonus and/or bonus plan shall not modify the Incentive Goal Parameters.

4. Long Term Compensation . In addition to your Salary and Bonus, you shall receive the following grants of long-term compensation under the CBS Corporation 2009 Long-Term Incentive Plan (as amended from time to time, together with any successor plan, the “ LTIP ”):

(a) Stock Options . During each of the calendar years 2018, 2019, 2020 and 2021, the Compensation Committee will in good faith consider granting to you stock options to purchase shares of Class B Common Stock under the LTIP as and when other senior members of the Company’s management team reporting to you are considered for annual equity grants by the Compensation Committee, and consistent with past practice with respect to the deliberations regarding, but not the amount of, your discretionary stock option grants (any such discretionary option grant, a “ Discretionary Option Grant ”); provided , however , that such consideration by the Compensation Committee does not guarantee (and should not be construed as a guarantee) that you will receive a Discretionary Option Grant in any such calendar year. The amount of any such grant(s) will be determined by the Compensation Committee, in its sole and reasonable discretion. The Compensation Committee, when considering whether it believes any such Discretionary Option Grant may be appropriate, will take into account the Employer’s financial and stock performance relative to its diversified media and entertainment peer companies, and, in particular whether the Company’s financial and stock performance is due, at least in part, to operating factors that have generally affected companies in the industry in a similar fashion. Any Discretionary Option Grant shall be subject to the terms and conditions set forth in the agreement evidencing such grant, which, except as otherwise provided herein, shall be no less favorable to you than the terms and conditions generally applicable to other senior executives of Employer, provided that any such Discretionary Option Grant will provide for vesting in full not later than June 30, 2021 (provided you remain employed on such date), and subject to acceleration and all other

applicable provisions of this Agreement. The Chair of the Compensation Committee will communicate to you the Compensation Committee’s rationale with respect to the Discretionary Option Grant for each calendar year (or if no Discretionary Option Grant is made for any calendar year, the Compensation Committee’s rationale for deciding not to make such a grant) promptly following its decision.

(b) Restricted Stock Units . During the Employment Term, you shall receive awards of restricted stock units (“ RSUs ”) as follows:

(i)

On the same date that Employer makes annual management grants under the LTIP to its other senior executives in each of calendar years 2018, 2019, 2020 and 2021, but in no event later than February 28 ^th of each such calendar year (each, an “ RSU Grant Date ”), you shall automatically receive an award of RSUs (the “ Annual RSUs ”) under the LTIP. One-half of the Annual RSUs underlying each grant shall be subject to performance- and time-based vesting conditions (“ Annual PRSUs ”), and the other half shall be subject only to time-based vesting conditions (the “ Annual TRSUs ”), in each case determined as of the RSU Grant Date. The initial grant of Annual RSUs in 2018 shall have a grant date value equal to Seventeen Million Dollars ($17,000,000), and each Annual RSU grant thereafter shall have a grant date value equal to Eighteen Million Five Hundred Thousand Dollars ($18,500,000), except that the grant of Annual RSUs for 2021 shall have a grant date value equal to 50% of the RSU Grant Date Value determined under such formula (each, an “ RSU Grant Date Value ”). The number of Annual RSUs granted on any RSU Grant Date (rounded down to a whole unit for any fractional unit) shall be determined by dividing the RSU Grant Date Value by the closing price of one share of Class B Common Stock on the RSU Grant Date. Each Annual RSU shall correspond to one share of Class B Common Stock. Annual RSUs (both Annual PRSUs and Annual TRSUs) shall be payable in shares of Class B Common Stock.

The number of Annual PRSUs granted on each RSU Grant Date shall be referred to herein as the “ Target PRSU Award .”


(a)	Annual TRSUs granted pursuant to this paragraph 4(b)(i) shall vest in three (3) equal installments on each of the first, second and third anniversaries of the applicable RSU Grant Date (or, if earlier, on June 30, 2021); provided that you are employed on each such vesting date and subject to acceleration and all other applicable provisions of this Agreement.

(b)

The Compensation Committee shall establish a performance goal with respect to each grant of Annual PRSUs made pursuant to this paragraph 4(b)(i) that shall apply in respect of a performance period that shall end no later than December 31st of the calendar year during which the grant is made (a “ PRSU Performance Goal ”); provided that for the partial year 2021, the performance period shall end not later than June 30, 2021.


(c)	The PRSU Performance Goal(s) shall satisfy the following requirements (the “ PRSU Goal Parameters ”):

•

The PRSU Performance Goal established by the Compensation Committee for each grant of Annual PRSUs shall be based upon achievement of one or more Company-wide performance goals established in good faith by the Compensation Committee for each relevant calendar year, and shall be the same performance goal applicable to PRSUs granted to other senior executives of Employer who participate in the Senior Executive STIP for such year; provided that such goal shall be adjusted for any performance period that is less than a full calendar year to reflect budgeted Company performance for the shortened performance period;


•	The PRSU Performance Goal(s) will be challenging, but reasonably achievable; and

•

For each calendar year, the level of difficulty in achieving the PRSU Performance Goal(s) for that calendar year will not be significantly more difficult (as determined at the time such PRSU Performance Goal(s) are established, taking into account all relevant facts and circumstances, including the Company’s relative financial and stock performance, general market conditions and market conditions affecting diversified media and entertainment companies) than was the level of difficulty of achieving the PRSU Performance Goal(s) applicable to the immediately preceding calendar year. For avoidance of doubt, the fact that target level performance with respect to PRSU Performance Goal(s) increases from one year to the following year shall not be presumed, in and of itself, to mean that such PRSU Performance Goal(s) for the calendar year are significantly more difficult to attain

than the PRSU Performance Goal(s) for the immediately preceding calendar year.


•	You shall have meaningful input with the Compensation Committee prior to the determination of the PRSU Performance Goal(s) for each calendar year, but the Compensation Committee will have final power and authority concerning the establishment of such goal(s).

(d)

As of the last day of each performance period, the Company’s actual performance shall be measured against the applicable PRSU Performance Goal established for such performance period, after taking into account any permissible adjustments to such goal, and the degree of achievement (expressed as a percentage) will be used to calculate the number of shares that you will receive, in accordance with the following schedule:


•	If the Company achieves less than 80% of the applicable PRSU Performance Goal for the performance period, the Target PRSU Award will be forfeited;


•	If the Company achieves 80% of the applicable PRSU Performance Goal for the performance period, the number of shares to be delivered under the award will be 80% of the Target PRSU Award;


•	If the Company achieves 100% of the applicable PRSU Performance Goal for the performance period, the number of shares to be delivered under the award will be 100% of the Target PRSU Award; and


•	If the Company achieves 120% or more of the applicable PRSU Performance Goal for the performance period, the number of shares to be delivered under the award will be 120% of the Target PRSU Award.

For achievement at an intermediate point between 80% and 100%, and between 100% and 120%, the number of shares of Class B Common Stock to be delivered will be interpolated on a straight-line basis between the respective numbers of shares to be delivered at such percentages.

Fractional shares will be aggregated and rounded to the next higher whole share.

(e)

The number of PRSUs, determined pursuant to clause (d) above, shall vest on the later of ( x ) the first anniversary of the RSU Grant Date (or, in the case of the 2021 grant of PRSUs, on June 30, 2021), or ( y ) the date the Compensation Committee certifies that at least minimum threshold performance has been achieved for the relevant performance period, which certification shall take place no later than seventy-four (74) days following the end of the relevant performance period (or no later than August 15, 2021 in the case of the 2021 grant of PRSUs) (the “ PRSU Vest Date ”), provided that you are employed on the applicable PRSU Vest Date (other than with respect to a certification by the Compensation Committee of the 2021 grant of PRSUs, in which case you are not required to be employed after June 30, 2021) and subject to acceleration and all other applicable provisions of this Agreement.

(f)

The Annual RSUs shall also accrue dividend equivalents in accordance with the LTIP, provided that in the case of Annual PRSUs, dividend equivalents shall be accrued and paid only with respect to the Target PRSU Award, unless actual performance results in payment of a lesser number of shares of Class B Common Stock than under the Target PRSU Award, in which case dividend equivalents shall be paid only with respect to such lesser number. Subject to the terms and conditions set forth in this paragraph 4(b)(i) or as otherwise provided herein, the Annual RSUs shall be subject to the terms and conditions set forth in the agreement evidencing the grant of such Annual RSUs.

(ii)

You will have an option to defer the settlement of any Annual RSU awards by making an irrevocable election on or before December 31 ^st of the prior calendar year (by way of example, any election to defer the Annual RSUs to be granted in 2018 must be made no later than December 31, 2017). You may elect to defer the settlement of such RSUs as follows: for up to ten (10) years after the RSUs vest for in-service distributions, and for up to three (3) years after your Separation from Service (as defined in paragraph 10) with the Company for post-termination distributions. If a timely election to defer is not made for any RSUs, shares delivered in settlement of TRSUs shall be delivered within ten (10) business days following the applicable vesting date, and shares delivered in settlement of PRSUs shall be delivered on or promptly following the PRSU Vest Date and during the period January 1 ^st through

March 15 ^th of the calendar year after the calendar year in which they are granted (or, for the 2021 grant of PRSUs, within 60 days after June 30, 2021). Notwithstanding any of the foregoing, to the extent required to comply with Section 409A (as defined in paragraph 10(d)(iii)), the settlement of each deferred RSU will be deferred to the date determined in accordance with paragraph 10(d)(v) if such date is later than the date on which settlement would otherwise occur.

(i) You shall be eligible to receive a grant of shares of Class B Common Stock based on the stock price performance of Employer’s Class B Common Stock over the period beginning January 1, 2015 and ending on June 30, 2019 (or earlier in certain instances as provided for in Schedule A to this Agreement), and subject to the Company’s degree of achievement against the PRSU Performance Goals for calendar years 2016, 2017 and 2018 (the “ 2015 Performance Award ”). The number of shares of Class B Common Stock to be granted to you and the timing of such grant shall be determined pursuant to the schedule set forth on Schedule A to this Agreement, a copy of which is attached hereto and incorporated herein by reference.

(ii) You shall be eligible to receive a grant of shares of Class B Common Stock based on the stock price performance of Employer’s Class B Common Stock over the period beginning February 18, 2016 and ending on June 30, 2019 (or earlier in certain instances as provided for in Schedule B to this Agreement), and subject to the Company’s degree of achievement against the PRSU Performance Goals for calendar years 2017 and 2018 (the “ 2016 Performance Award ”). The number of shares of Class B Common Stock to be granted to you and the timing of such grant shall be determined pursuant to the schedule set forth on Schedule B to this Agreement, a copy of which is attached hereto and incorporated herein by reference.

(iii) You shall be eligible to receive a grant of shares of Class B Common Stock based on the stock price performance of Employer’s Class B Common Stock over the period beginning on the date this Agreement is executed by both parties hereto and ending on June 30, 2021 (or earlier in certain instances as provided for in Schedule C to this Agreement), and subject to the Company’s degree of achievement against the PRSU Performance Goals for calendar years 2019 and 2020 (the “ 2017 Performance Award ,” and together with the 2015 Performance Award and the 2016 Performance Award, the “ Performance Awards ”). The number of shares of Class B Common Stock to be granted to you and the timing of such grant shall be determined pursuant to the schedule set forth on Schedule C to this Agreement, a copy of which is attached hereto and incorporated herein by reference.

(iv) For the avoidance of doubt, each reference to “any other type of equity awards” in paragraphs 4(f), 9, 10, 11 and 12 is not intended to be a reference to the Performance Awards, the treatment of which in a “Going Private

Transaction” (as defined below) or upon your incapacity, termination or death, as applicable, is separately addressed in Schedules A , B and C attached to this Agreement.

(d) Cash Performance Award . Subject to your continuous employment with Employer through June 30, 2021 (or earlier in certain instances as provided for in Schedule D to this Agreement), and during the periods specified herein, if the Company achieves at least the threshold level of cumulative adjusted operating income (“ COI ”) for the relevant performance period as provided for in Schedule D to this Agreement, you shall be eligible to receive a lump sum cash payment (the “ Cash Performance Award ”). The amount of the Cash Performance Award to be awarded to you and the timing of such award shall be determined pursuant to the schedule set forth on Schedule D to this Agreement, a copy of which is attached hereto and incorporated herein by reference.

(e) In the event of a conflict between the terms and conditions set forth in this paragraph 4 and the terms and conditions set forth in an agreement(s) or plan(s) evidencing the grant of the awards contemplated by paragraphs 4(a) and (b) (and 4(c) and (d), if applicable), the terms of this Agreement shall control. For avoidance of doubt, any outstanding equity awards that were granted to you prior to the Start Date will continue to vest in accordance with their established vesting schedules (including as provided in the Prior Agreement), subject to acceleration and all other applicable provisions of this Agreement.

(f) If, during the Original Employment Term, there occurs a “Going Private Transaction” (as defined below), then immediately prior to the consummation of such Going Private Transaction, (i) all of your then outstanding unvested stock options will vest, and all such options and all of your outstanding stock options that have previously vested will remain exercisable for the period provided in accordance with the provisions of grant, but not beyond their normal expiration date; provided , however , that you shall be permitted to exercise all outstanding stock options (including those which vest pursuant to this clause (i)) contingent upon and immediately prior to consummation of the Going Private Transaction so that you are afforded the same treatment as other holders of Class B Common Stock; and (ii) all of your then unvested and outstanding restricted stock and/or restricted stock units and any other type of equity awards that are then unvested and outstanding shall vest (with an assumption that the performance goal(s) were achieved at target level, if and to the extent applicable) and, subject to any prior deferral election, be settled within ten (10) business days after such date; provided , however , that with respect to such restricted stock, restricted stock units and any other type of equity awards, you will be afforded the same treatment as other holders of Class B Common Stock with respect to participation in the specific Going Private Transaction; provided , further , that in the case of clause (ii) above, settlement of such restricted stock, restricted stock units and any other type of equity awards shall be subject to paragraph 10(d)(v), as applicable.

Additionally, you will receive ( x ) grants of shares of Class B Common Stock earned as the Performance Awards (if any) pursuant to (and at the time provided in) Schedules A , B and C , and ( y ) payment of the Cash Performance Award (if any)

pursuant to (and at the time provided in) Schedule D , in each case subject to paragraphs 10(d)(iv), 10(d)(v) and 10(e), as applicable.

For purposes of this Agreement (including Schedules A , B , C and D attached hereto), the term “ Going Private Transaction ” means any transaction or event which results in Employer ceasing to be a “ Publicly Traded Company ” ( i.e., a company that has a class of equity securities registered under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) for any reason, including, without limitation, as a result of a merger, consolidation or similar transaction; provided , however , that a Going Private Transaction shall not include a reorganization or similar transaction of Employer or any of its subsidiaries if, immediately following such transaction, all or substantially all the beneficial owners of Employer’s stock having general voting power immediately prior to such transaction directly or indirectly own more than fifty percent (50%) of the general voting power of the entity resulting from such transaction (the “ Combined Company ”) in substantially the same proportions as their beneficial ownership of such Employer stock immediately prior to the transaction (excluding any general voting power of the Combined Company that such beneficial owners directly or indirectly received as a result of their beneficial ownership of the other entity involved in the transaction).

(g) (i) During and after the Employment Term, you shall have the choice to satisfy payment of any exercise price owed in connection with your exercise of stock options or any applicable withholding taxes related to equity-based awards by any one or a combination of the following:


(a)	withholding from your wages or other cash compensation payable to you by Employer (except to the extent any such wages or other cash compensation constitutes deferred compensation within the meaning of Section 409A);


(b)	withholding in shares of Class B Common Stock to be issued upon vesting and settlement of any RSUs;


(c)	withholding from the proceeds of the sale of shares of Class B Common Stock acquired upon exercise of stock options;


(d)	withholding in shares to be issued upon exercise of stock options; and/or


(e)	direct payment to Employer with personal funds.

You agree to pay to Employer any amounts that Employer may be required to withhold or account for that cannot be satisfied by the means previously described. Employer may refuse to issue or deliver shares of Class B Common Stock or the proceeds of the sale of such shares if you fail to comply with your obligations as set forth in the preceding sentence.


(ii)	Notwithstanding paragraph 4(g)(i) and to the extent applicable, following a Going Private Transaction, unless you otherwise specifically direct Employer in writing, any stock option exercise will be processed as a “cashless exercise” such that the net proceeds payable to you reflect a deduction for the payment of the aggregate purchase and all applicable tax withholdings.

5. Benefits .

(a) During the Employment Term, you shall be entitled to participate in such life and medical insurance, pension and other employee benefit plans as the Company may have or establish from time to time and in which other Company executives with corporate-wide responsibilities are eligible to participate. The foregoing, however, shall not be construed to require Employer or any of its subsidiaries to establish any such plans or to prevent the modification or termination of such plans once established, and no such action or failure thereof shall affect this Agreement; provided that no such modification or termination shall be applicable to you unless also equally applicable to all other Company executives with corporate-wide responsibilities. All benefits you may be entitled to as an employee of Employer shall be based upon your Salary and not upon any bonus compensation due, payable or paid to you hereunder, except where the benefit plan expressly provides otherwise. You shall be entitled to four (4) weeks paid vacation during each calendar year during the Employment Term.

(b) Employer shall provide you with life insurance during the Employment Term at Employer’s cost, at no less than the same level of coverage that was in effect immediately prior to the Start Date and on terms and conditions under which the life insurance is provided that are no less favorable to you than those in effect immediately prior to the Start Date. You (or your assignee, as applicable) shall designate the beneficiary or beneficiaries of such life insurance and you shall have the right to assign the policy for such life insurance to your spouse and/or issue or to a trust or trusts primarily for the benefit of your spouse or issue.

(c) The limitation on eligible compensation taken into account for purposes of calculating your plan benefit under the CBS Retirement Excess Pension Plan (or any other non-qualified supplemental retirement plan in which you actively participate now or in the future) (each, a “ SERP ”) shall be deemed to be an amount equal to your Salary; provided , however , that if any such SERP is frozen or reduced as to future benefit accruals after your Start Date, you shall be treated as continuing to accrue benefits as set forth in this paragraph 5(c) under such SERP through the end of the Employment Term.

6. Business Expenses, Perquisites .

(a) During the Employment Term, you shall be reimbursed for such reasonable travel and other expenses incurred in the performance of your duties hereunder on a basis no less favorable than that provided by Employer to its senior executives other than Employer’s Chairman Emeritus, but in any event on a basis

consistent with that provided to you, or agreed to be provided to you, immediately prior to the date of this Agreement.

(b) Employer shall pay all fees and expenses of your counsel and other fees and expenses which you may incur in an effort to establish entitlement to compensation or other benefits under this Agreement in accordance with paragraph 20. During the Employment Term, you shall be entitled to the use of a private plane in accordance with Employer policy on a basis no less favorable than that provided by Employer to any of its senior executives at your level or below (accompanied by your spouse, at your option and, unless your spouse’s presence is required by the Company, at your cost) but in any event no less favorable to you than had previously been provided to you immediately prior to the date of this Agreement. During the Employment Term, you also shall be entitled to other perquisites ( i.e. , excluding the foregoing benefits), including provision for insurance of a car (the “ Perquisites ”), in accordance with Employer policy on a basis no less favorable than that provided by Employer to any of its senior executives other than Employer’s Chairman Emeritus.

(c) Given the expected depreciation and the associated cost of removal of the work area constructed and equipment installed in your home pursuant to paragraph 6(d) of that certain Employment Agreement by and between you and Employer, dated February 23, 2010, you shall be entitled to keep any such work area and equipment, as updated from time to time, following the end of the Employment Term.

7. Competitive Assessment . Notwithstanding the foregoing paragraphs 3 through 6, if, in connection with the annual review of your Salary and Target Bonus, it is determined that your annualized target compensation package (consisting of Salary, Target Bonus and target long-term incentives, without regard to any deferrals) is, in the aggregate, less than that of other chief executive officer(s) of comparably-sized diversified media and entertainment companies (to be determined by the Compensation Committee with input from its independent compensation consultant), the Compensation Committee will consider an increase to your annual target compensation package, taking into account the financial and stock performance of Employer relative to other diversified media and entertainment peer companies and, in particular, to the comparably-sized diversified media and entertainment companies that have chief executive officers whose annualized target compensation exceeds yours.

8. Exclusive Employment, Etc .

(a) Non-Competition . You agree that your employment hereunder is on an exclusive basis, and that during the period (the “ Non-Compete Period ”) beginning on the Start Date and ending on the first anniversary of the end of the Employment Term ( provided , however , that if you remain employed and are being paid on Company’s payroll through the end of the Original Employment Term, the Non-Compete Period will end on the last day of the Original Employment Term), other than as permitted by paragraph 2(c), you will not engage in any other business activity which is in conflict with your duties and obligations (including your commitment of time) hereunder. You agree that during the Non-Compete Period you shall not, directly or indirectly, engage in

or participate as an owner, partner, holder or beneficiary of stock, stock options or other equity interest, officer, employee, director, manager, partner or agent of, or consultant for, any company or business competing with the Company; provided , however , that nothing herein shall prevent you from participating in any investment activities specifically allowed under paragraph 2(c) and from investing as less than a one (1%) percent stockholder in the securities of any company listed on a national securities exchange or quoted on an automated quotation system.

(b) No Solicitation of Employees . You agree that during the Employment Term and for the period provided below after the termination of your employment for any reason, you will not employ any Restricted Employee (as defined below), or in any way induce or attempt to induce any Restricted Employee to leave the employment of Employer or any of its affiliates. You agree that you will not take the actions described in the preceding sentence (i) with respect to any Restricted Employee at the level of Vice President or above for one (1) year after the termination of your employment for any reason, and (ii) with respect to any Restricted Employee at the level of director for six (6) months after the termination of your employment for any reason. “ Restricted Employee ” refers to any person employed by Employer or any of its subsidiaries or their respective predecessors or previously employed by Employer or any of its subsidiaries or their respective predecessors (unless at such time such person has not been employed by Employer and/or any of its subsidiaries or their respective predecessors for at least six (6) months).

(c) Confidential Information . You agree that, during the Employment Term or at any time thereafter, you will not use for your own purposes, or disclose to or for the benefit of any third party, any trade secret, proprietary or non-public information relating to the Company (“ Confidential Information ”) (except as may be required by law but only after prior notice to Employer (to the extent not prohibited by law) or in the performance of your duties hereunder consistent with the Company’s policies) and you will comply with any and all confidentiality obligations of the Company to a third party which you know or should know about, whether under agreement or otherwise. Confidential Information shall include, without limitation, trade secrets; inventions (whether or not patentable); technology and business processes; business, product or marketing plans; sales and other forecasts; financial information; client lists or other intellectual property; information relating to compensation and benefits; public information that becomes proprietary as a result of Employer’s compilation of that information for use in its business; documents (including any electronic record, videotapes or audiotapes); and oral communications incorporating Confidential Information. Notwithstanding the foregoing, Confidential Information shall be deemed not to include information which (i) is or becomes generally available to the public other than as a result of a disclosure by you in violation of this Agreement or by any other person who directly or indirectly receives such information from you or at your direction in violation of this Agreement, or (ii) is or becomes available to you on a non-confidential basis from a source which is entitled to disclose it to you.

(d) Employer Ownership . The results and proceeds of your services to the Company, whether or not created during the Employment Term, including, without

limitation, any works of authorship resulting from your services and any works in progress resulting from such services, shall be works-made-for-hire and Employer shall be deemed the sole owner throughout the universe of any and all rights of every nature in such works, with the right to use, license or dispose of the works in perpetuity in any manner Employer determines in its sole discretion without any further payment to you, whether such rights and means of use are now known or hereafter defined or discovered. If, for any reason, any of the results and proceeds of your services to the Company are not legally deemed a work-made-for-hire and/or there are any rights in such results and proceeds which do not accrue to Employer under this paragraph 8(d), then you hereby irrevocably assign any and all of your right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of every nature in the work, and Employer shall have the sole right to use, license or dispose of the work in perpetuity throughout the universe in any manner Employer determines in its sole discretion without any further payment to you, whether such rights and means of use are now known or hereafter defined or discovered. Upon request by Employer, whether or not during the Employment Term, you shall do any and all things (at Employer’s expense) which Employer may reasonably deem useful or desirable to establish or document Employer’s rights in the results and proceeds of your services to the Company, including, without limitation, the execution of appropriate copyright, trademark and/or patent applications, assignments or similar documents. You hereby irrevocably designate the Senior Executive Vice President and Chief Legal Officer, Secretary or any Assistant Secretary of Employer as your attorney-in-fact with the power to take such action and execute such documents on your behalf. To the extent you have any rights in such results and proceeds that cannot be assigned as described above, you unconditionally and irrevocably waive the enforcement of such rights. This paragraph 8(d) is subject to, and does not limit, restrict, or constitute any waiver by Employer of any rights of ownership to which Employer may be entitled by operation of law by virtue of Employer or any of its affiliates or predecessors being your employer.

(e) Litigation . You agree that during the Employment Term and for a one-year period thereafter and, if longer, during the pendency of any litigation or other proceeding, (i) you shall not communicate with anyone (other than your attorneys and tax advisors and except to the extent required by law or necessary in the performance of your duties hereunder) with respect to the facts or subject matter of any pending or potential litigation, or regulatory or administrative proceeding involving Employer or any of its affiliates or predecessors, other than any litigation or other proceeding in which you are a party-in-opposition, without giving prior notice to Employer or Employer’s counsel, and (ii) in the event that any other party attempts to obtain information or documents from you with respect to matters possibly related to such litigation or other proceeding, you shall promptly so notify Employer’s counsel unless you are prohibited from doing so under applicable law. You agree to cooperate, in a reasonable and appropriate manner, with Employer and its attorneys, both during and after the termination of your employment or services, in connection with any litigation or other proceeding arising out of or relating to matters in which you were involved prior to the termination of your employment or services to the extent Employer pays all reasonable expenses you incur in connection with such cooperation (including, without limitation, the fees and expenses of

your counsel) and to the extent such cooperation does not unreasonably interfere with your personal or professional schedule.

(f) No Right to Write Books, Articles, Etc . During the Employment Term and for two (2) years thereafter but not beyond the end of the Original Employment Term, except in the course of the performance of your duties and responsibilities or otherwise as authorized by the Board, you shall not prepare (other than personal notes and/or a diary) or assist any person or entity in the preparation of any books, articles, radio broadcasts, electronic communications, television or motion picture productions or other creations, concerning Employer or any of its affiliates or predecessors or any of their officers, directors, agents, employees, suppliers or customers.

(g) Return of Property . All documents, data, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for you and utilized by you in the course of your employment with Employer shall remain the exclusive property of Employer and shall remain in Employer’s exclusive possession at the conclusion of your Employment Term. In the event of the termination of your employment or services for any reason, Employer reserves the right, to the extent permitted by law and in addition to any other remedy Employer may have, to deduct from any monies otherwise payable to you the following: (i) all undisputed amounts you may owe, pursuant to a legally enforceable agreement, to Employer or any of its affiliates or predecessors at the time of or subsequent to the termination of your employment or services with Employer (including amounts described in paragraph 4(f)); and (ii) the value of Employer property which you are required to return and which you retain in your possession after the termination of your employment or services with Employer following Employer’s written request for same and your failure to return same. In the event that the law of any state or other jurisdiction requires the consent of any employee for such deductions, this Agreement shall serve as such consent. Notwithstanding anything in this paragraph 8(g) to the contrary, Employer will not exercise such right to deduct from any monies otherwise payable to you to the extent such offset would result in a violation of Section 409A.

(h) Non-Disparagement . You and, to the extent set forth in the next sentence, Employer agree that each party shall not, during the Employment Term and for one (1) year thereafter, criticize, ridicule or make any statement which disparages or is derogatory of the other party in any non-public communication with any customer, client or member of the investment community or media or in any public communication. Employer’s obligations under the preceding sentence shall be limited to communications by its senior corporate executives having the rank of Senior Vice President or above (“ Specified Executives ”), and it is agreed and understood that any such communication by any Specified Executive (or by any executive at the behest of a Specified Executive) shall be deemed to be a breach of this paragraph 8(h) by Employer. Notwithstanding the foregoing, neither you nor Employer shall be prohibited from making statements in response to statements by the other party (or in your case, with respect to any Specified Executives) that criticize or ridicule or are disparaging or derogatory, provided that the responsive statements do not criticize or ridicule and are not disparaging or derogatory.

(i) Injunctive Relief, Etc . Employer has entered into this Agreement in order to obtain the benefit of your unique skills, talent and experience. You acknowledge and agree that any violation of paragraphs 8(a) through 8(h) will result in irreparable damage to Employer, and, accordingly, Employer may obtain injunctive and other equitable relief for any breach or threatened breach of such paragraphs, in addition to any other remedies available to Employer. You and Employer agree that the restrictions and remedies contained in paragraphs 8(a) through 8(h) are reasonable and that it is your intention and the intention of Employer that such restrictions and remedies shall be enforceable to the fullest extent permissible by law. If it is found by a court of competent jurisdiction that any such restriction or remedy is unenforceable but would be enforceable if some part thereof were deleted or the period or area of application reduced, then such restriction or remedy shall apply with such modification as shall be necessary to make it enforceable.

(j) Survival . Your obligations under paragraphs 8(a) through 8(h) and Employer’s obligations under paragraph 8(h) shall remain in full force and effect for the entire period provided therein (and only for such period, subject, however, to the provisions of paragraph 12(j)), notwithstanding the termination of your employment pursuant to paragraph 10 hereof or otherwise, or the expiration of the Original Employment Term.

(k) Notwithstanding anything herein to the contrary, your obligation to protect confidential and proprietary information and not to disparage Employer shall not prohibit you from disclosing matters that are protected under any applicable whistleblower laws, including reporting possible violations of laws or regulations, or responding to inquiries from, or testifying before, any governmental agency or self-regulating authority, all without notice to or consent from Employer. Additionally, you hereby are notified that the immunity provisions in Section 1833 of title 18 of the United States Code provide that an individual cannot be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that is made (i) in confidence to federal, state or local government officials, either directly or indirectly, or to an attorney, and is solely for the purpose of reporting or investigating a suspected violation of the law, (ii) under seal in a complaint or other document filed in a lawsuit or other proceeding, or (iii) to your attorney in connection with a lawsuit for retaliation for reporting a suspected violation of law (and the trade secret may be used in the court proceedings for such lawsuit) as long as any document containing the trade secret is filed under seal and the trade secret is not disclosed except pursuant to court order.

9. Incapacity . In the event that you have become totally medically disabled and you will not be able to substantially perform your duties for at least six (6) consecutive months or a total of 180 days during any 270 day period, the Board, at any time after such disability has continued for 60 consecutive days, may determine, provided such determination is made while the disability is still in effect, that Employer requires such duties and responsibilities be performed by another executive. In the event that you become “ disabled ” within the meaning of such term under Employer’s Short-Term Disability (STD) and its Long-Term Disability (LTD) program, you will first receive benefits under the STD program for the first 26 weeks of absence in accordance with

such program, which will be equal to your Salary, and the amount of such benefits will offset any Salary that otherwise would be paid to you pursuant to this Agreement. Thereafter, you will be eligible to receive benefits under the LTD program in accordance with its terms. For purposes of this Agreement, you will be considered to have experienced a termination of employment with Employer as of the date you first become eligible to receive benefits under the LTD program, or, if you do not become eligible to receive benefits under the LTD program, on the date following the sixth consecutive month in which you have not been able to substantially perform your duties hereunder (“ Disability Termination Date ”), and until that time you shall be treated for all purposes of this Agreement as an active employee of Employer. Upon your Disability Termination Date, your benefits will be the following in accordance with the payment provisions set forth in paragraph 10(d)(iii) and subject to the provisions of paragraph 10(d)(v):


(i)	Employer will pay your Accrued Compensation and Benefits (as defined below in paragraph 10(d)(ii));


(ii)	Employer will pay you a prorated Bonus for the year of your termination of employment based on your Target Bonus and the number of calendar days of such year elapsed through the date of your termination of employment;


(iii)	all of your outstanding unvested Employer stock options will vest, and all such options and all of your outstanding options that have previously vested will remain exercisable for the greater of three years and the period provided for under the terms of the applicable award agreement, but in no event beyond their normal expiration date;

(iv)

all of your unvested and outstanding restricted stock and/or restricted stock units and any other type of equity awards that are then unvested and outstanding, in each case, as of the Disability Termination Date shall vest and, subject to any prior deferral election, be settled within ten (10) business days after your Disability Termination Date; provided , that to the extent any such unvested and outstanding equity awards remain subject to performance-based vesting conditions on your Disability Termination Date, such equity awards shall immediately vest (with an assumption that the performance goal(s) were achieved at target level, if and to the extent applicable) and, subject to any prior deferral election, be settled within ten (10) business days thereafter;


(v)	You will receive ( x ) grants of shares of Class B Common Stock earned as the Performance Awards (if any) pursuant to (and at the time provided in) Schedules A , B and C , and ( y ) payment of the Cash Performance Award (if any) pursuant to (and at the time

provided in) Schedule D , in each case subject to paragraph 10(d)(v); and

(vi)

Employer will continue to provide you with life insurance coverage as set forth in paragraph 5(b), at the same level of coverage that was in effect immediately prior to the Disability Termination Date and on terms and conditions under which the life insurance is provided that are no less favorable to you than those in effect immediately prior to the Disability Termination Date, until the end of the Original Employment Term or, if earlier, the date on which you become eligible for at least as much insurance coverage as the coverage that was in effect at the time of your termination, from a third party employer at such employer’s expense; provided , however , that Employer may decrease the amount of premiums it pays towards life insurance coverage it provides you so long as the amount of such coverage that it continues to provide, combined with the amount of such coverage provided to you from a third party employer at such employer’s expense, aggregates at least the amount of coverage that was in effect for you on the Disability Termination Date as a result of Employer’s obligations as set forth in paragraph 5(b).

10. Termination . For purposes of paragraphs 3(a), 9, 10 and 12, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a Separation from Service. A “ Separation from Service ” shall be deemed to have occurred on the date on which the level of bona fide services reasonably anticipated to be performed by you is 45% or less of the average level of bona fide services performed by you during the immediately preceding 36-month period.

(a) Termination for Cause . Employer may, at its option, terminate your employment for Cause (as defined below). For purposes of this Agreement, termination of your employment for “ Cause ” shall mean termination of your employment due to any of the following:


(i)	your engaging or participating in intentional acts of material fraud against the Company;


(ii)	your willful misfeasance having a material adverse effect on the Company (except in the event of your incapacity as set forth in paragraph 9);


(iii)	your conviction of a felony;


(iv)	your willful unauthorized disclosure of trade secret or other confidential material information of the Company having a material adverse effect on the Company;


(v)	your terminating your employment without Good Reason (as defined below) other than for death or incapacity pursuant to paragraph 9 (it being understood that your terminating your employment during the Original Employment Term without Good Reason prior to the end of the Original Employment Term shall constitute Cause);

(vi)

your willful and material violation of any policy of the Company that is generally applicable to all employees or all officers of the Company (including, but not limited to, policies concerning insider trading or sexual harassment, Supplemental Code of Ethics for Senior Financial Officers, and Employer’s Business Conduct Statement), provided that such violation has a material adverse effect on the Company;

(vii)

your willful failure to cooperate fully with a bona fide Company internal investigation or an investigation of the Company by regulatory or law enforcement authorities whether or not related to your employment with the Company (an “ Investigation ”), after being instructed by the Board to cooperate or your willful destruction of or knowing and intentional failure to preserve documents or other material known by you to be relevant to any Investigation; or


(viii)	your willful and material breach of any of your material obligations hereunder.

For purposes of the foregoing definition, an act or omission shall be considered “willful” if done, or omitted to be done, by you with knowledge and intent. Anything herein to the contrary notwithstanding, the Board will give you written notice, not more than thirty (30) calendar days after the occurrence of the event constituting Cause comes to the attention of another “executive officer” of Employer (as defined by the rules and regulations of the Securities Exchange Commission for purposes of the Exchange Act), prior to terminating this Agreement for the cause set forth in clauses (i), (ii), (iv), (vi), (vii) and (viii) above. Such notice shall set forth the nature of any alleged misfeasance in reasonable detail and the conduct required to cure such misfeasance. Except for a breach which cannot by its nature be cured, you shall have thirty (30) calendar days from your receipt of such notice within which to cure and within which period Employer cannot terminate this Agreement for the stated reasons, and, if so cured, after which period Employer cannot terminate your employment under this Agreement for the stated reasons. For purposes of this Agreement, no such purported termination of your employment for Cause set forth in clauses (i), (ii), (iv), (vi), (vii) and (viii) above shall be effective without such notice.

(b) Good Reason Termination . You may terminate your employment hereunder for “Good Reason” at any time during the Original Employment Term upon

written notice to Employer not more than thirty (30) calendar days after you become aware of the occurrence of the event constituting Good Reason; provided , however , that in the case of an event described in clause (viii) below, such written notice shall be provided not earlier than ninety (90) days following the occurrence of such event. Such notice shall state an effective date no earlier than thirty (30) calendar days after the date it is given. Employer shall have thirty (30) calendar days from the giving of such notice within which to cure and within which period you cannot terminate your employment under this Agreement for the stated reasons and, if so cured, after which you cannot terminate your employment under this Agreement for the stated reasons; provided , however , that this sentence shall not apply with respect to events which by their nature cannot be cured (it being understood that the occurrence of an event described in paragraph 10(b)(i), 10(b)(ii), 10(b)(iv)(D), 10(b)(viii) or 10(b)(x) shall be considered an event of the type which by its nature cannot be cured). “ Good Reason ” shall mean, without your prior written consent, other than in connection with the termination of your employment for Cause (as defined above) or incapacity (as set forth in paragraph 9) or as a result of your death:


(i)	your removal from or any failure to re-elect you as Chairman of the Board, President and Chief Executive Officer or any higher office or title attained of Employer;


(ii)	your removal from or failure to be elected or reelected to the Board at any annual meeting of shareholders of the Company at which your term as director is scheduled to expire;


(iii)	the assignment to you by Employer of duties inconsistent with the usual and customary duties associated with a chairman of the board, president and chief executive officer of a Publicly Traded Company comparable to Employer;

(iv)

the diminution or withdrawal of a meaningful portion of your positions, titles, offices, reporting relationships, authorities, duties or responsibilities as set forth in paragraph 2, which, for avoidance of doubt, shall specifically include: (A) any arrangement involving the sharing of your positions, titles, offices, reporting relationships, authorities, duties or responsibilities; (B) any removal of positions, titles, offices, reporting relationships, authorities, duties or responsibilities which are customarily given to the chairman of the board, president and chief executive officer of a Publicly Traded Company comparable to Employer; (C) Employer becoming a publicly traded subsidiary of a Publicly Traded Company, unless you are made Chairman of the Board of Directors, President and Chief Executive Officer and senior-most executive officer of the ultimate publicly traded parent company; or (D) Employer ceasing to be a Publicly Traded Company by reason of the consummation of a Going Private Transaction, unless such cessation occurs

pursuant to or as a result of a transaction or transactions that you have recommended or approved;

(v)

(A) a reduction in your Salary, Target Bonus or your other compensation levels, in each case as the same may be increased from time to time during the Employment Term; (B) the Compensation Committee’s establishing Company-Wide Performance Goal(s) that fail to satisfy the Incentive Goal Parameters (as defined in paragraph 3(b)(ii)); (C) the Compensation Committee’s establishing PRSU Performance Goal(s) that fail to satisfy the PRSU Goal Parameters (as defined in paragraph 4(b)(iii)(c)); or (D) payment of a Bonus that is less than the Company-Wide Performance Bonus determined in accordance with the formula set forth in paragraph 3(b)(iii) above;


(vi)	Employer’s requiring you to be based anywhere other than the New York or Los Angeles metropolitan area, except for required travel on the Company’s business;


(vii)	the appointment of a non-Executive Chairman; provided , that Employer’s sole and exclusive cure shall be the removal of the non-Executive Chairman within the prescribed 30-day cure period;

(viii)

the date on which a majority of the directors of the Board ceases to consist of (A) those individuals who (i) were nominated for election to the Board at Employer’s 2017 Annual Meeting as of April 7, 2017 and (ii) constitute the independent directors of the Board immediately following the conclusion of Employer’s 2017 Annual Meeting (the “ Original Independent Directors ”); and (B) any successor to an Original Independent Director (or a Qualified Replacement Director (as defined below)) who is elected or appointed to the Board, either pursuant to a unanimous vote of the remaining Original Independent Directors or by action of the shareholders of the Employer pursuant to a unanimous recommendation by the remaining Original Independent Directors, as a result of the death or voluntary retirement or resignation of such Original Independent Director (or such Qualified Replacement Director), including a voluntary determination by such Original Independent Director (or such Qualified Replacement Director) not to stand for re-election to the Board (a “ Qualified Replacement Director ”); provided , that on and after July 1, 2019, the vote or recommendation, as applicable, of at least seventy-five percent (75%) of the remaining Original Independent Directors shall be required in lieu of the unanimous vote or unanimous recommendation referenced in clause (B) above; provided , further , that any other Qualified Replacement Directors will be considered remaining Original Independent Directors for

purposes of determining whether such successor director is a Qualified Replacement Director;


(ix)	the date on which a majority of the members of the Compensation Committee or a majority of the members of the Nominating and Governance Committee of the Board ceases to consist of Original Independent Directors and Qualified Replacement Directors;

(x)

the date on which any “person” or “group” (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder), other than Employer’s senior management team as a group, directly or indirectly acquires or then beneficially owns (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) stock representing more than twenty percent (20%) of the general voting power of Employer at a time when neither (A) the person who was the ultimate beneficial owner (within the meaning of Rule 13d-3(a)(1) under the Exchange Act) (the “ Ultimate Voting Beneficial Owner ”) on January 1, 2011 of a majority of the general voting power of Employer is the Ultimate Voting Beneficial Owner of a majority thereof, nor (B) the trust that, on January 1, 2011, was the holder, directly or indirectly, of stock representing a majority of the general voting power of Employer (or a successor trust with respect to which the Ultimate Voting Beneficial Owner on January 1, 2011 had, as of the date such successor trust was established, the sole ability to vote stock representing, directly or indirectly, a majority of the general voting power of Employer) holds stock representing a majority of the general voting power of Employer; provided , however , that you shall provide written notice to the Chair of the Compensation Committee prior to the date you provide written notice of termination pursuant to this paragraph 10(b)(x) and offer and be available no later than ten (10) days after such notice to meet and discuss such acquisition or then beneficial ownership with the Chair and the Original Independent Directors and Qualified Replacement Directors and, following such discussions, you shall only be entitled to terminate your employment for Good Reason under this paragraph 10(b)(x) if you conclude and a majority of the Original Independent Directors and Qualified Replacement Directors concur in writing that the occurrence of such acquisition or then beneficial ownership has adversely affected your ability to perform your Chairman of the Board, President and Chief Executive Officer duties effectively such that your ability to contribute to the further creation of shareholder value is inhibited;


(xi)	the date on which a person is appointed or elected to, or nominated for appointment or election to, the Board who is: (A) a then current

or former Chief Executive Officer of a competitor media company (or other officer of a competitor media company with a title that is substantially equivalent to or higher ranking than Chief Executive Officer), other than any person who is serving on the Board on the Start Date; or (B) a trustee of a trust that, on such date, directly or indirectly, holds stock representing more than fifty percent (50%) of the general voting power of Employer if such trustee’s service on the Board would cause the number of trustees of the trust serving on the Board to exceed the number of individuals who ( x ) were trustees of the trust that, on January 1, 2011, held, directly or indirectly, stock representing a majority of the general voting power of Employer and ( y ) served on the Board as of the Start Date; or


(xii)	any other material breach by Employer of its material obligations hereunder, including, but not limited to, a breach of paragraph 2 (it being understood that a breach by Employer of any of its obligations contained in paragraph 2 shall constitute a material breach of a material obligation).

In the event that you make a determination to name a separate “President” and to relinquish the “President” title while continuing as Chairman of the Board and Chief Executive Officer, you hereby acknowledge that so long as the President is an individual that you have recommended consistent with your powers, duties and authorities set forth in paragraph 2, such appointment shall not constitute a breach of this Agreement or otherwise give you the right to terminate your employment for Good Reason pursuant to this paragraph 10(b). Employer hereby acknowledges that such an appointment shall not in any way affect any other provision of this Agreement, including specifically the type and amount of compensation that you earn under this Agreement, except that references to your former title shall be adjusted accordingly.

(c) Termination without Cause . Employer may terminate your employment without Cause at any time during the Original Employment Term by written notice to you.

(d) Termination Payments, Etc .

(i)

Termination for Cause . In the event that Employer terminates your employment for Cause, Employer shall promptly pay and provide you with Limited Accrued Compensation and Benefits. For purposes of this Agreement, “ Limited Accrued Compensation and Benefits ” shall consist of: ( w ) reimbursement of any unpaid business expenses to which you are entitled to reimbursement pursuant to paragraph 6(a) that were incurred prior to the effective date of your termination (the “ Termination Date ”); ( x ) your Salary through the Termination Date (as such date is determined in accordance with paragraph 10(a) or 10(b), as applicable); ( y ) any

Bonus with respect to any completed calendar year that is determined by the Compensation Committee for you for each calendar year in which you were employed but has not yet been paid; and ( z ) all other vested compensation and benefits to which you are entitled as of the Termination Date under the terms and conditions applicable to such compensation and benefits, including vested stock options, restricted shares, restricted stock units, the Deferred Salary (if any, as defined in paragraph 3(a) of your employment agreement dated as of October 15, 2007 and as amended thereafter) and Deferred Compensation. The portion of each of your Limited Accrued Compensation and Benefits scheduled to be paid in cash upon your termination of employment shall be paid in a lump sum within 30 days after the Termination Date.


(ii)	Termination without Cause or Resignation with Good Reason . In the event that Employer terminates your employment without Cause, or if you resign your employment for Good Reason, you shall be entitled to receive the following:


(a)	Employer will pay and provide your Limited Accrued Compensation and Benefits, plus any unpaid amounts to which you are entitled to reimbursement pursuant to paragraph 6(b) that were incurred prior to your Termination Date (together, the “ Accrued Compensation and Benefits ”);


(b)	Employer will pay you a Bonus for the calendar year in which you terminate employment, such Bonus to be determined based on actual performance pursuant to the performance goal(s) described in paragraph 3(b)(i) hereof, and then prorated based on the number of calendar days of such year elapsed through the date of your termination of employment (the “ Pro-Rata Bonus ”);

(c)

Employer will pay you a cash severance amount (the “ Severance Payment ”) equal to three (3) times the sum of: (i) your Salary in effect at the time of termination (or, if your Salary has been reduced in violation of this Agreement, your highest Salary during the Employment Term); and (ii) the average of the annual Bonuses payable to you (whether or not actually paid) with respect to the last three completed calendar years prior to the Termination Date; provided , that for purposes of determining the average annual Bonus under clause (ii), the term “Bonus” shall mean for each applicable calendar year the total amount designated by the Compensation Committee as

your Bonus for such calendar year, whether paid in cash, stock, stock options or stock awards or a combination thereof, and including any portion awarded as a Creative Bonus;


(d)	All of your outstanding unvested Employer stock options will vest, and all such options and all of your outstanding Employer stock options that have previously vested will remain exercisable for the greater of the period provided in accordance with the provisions of grant, or for three (3) years from the end of Employment Term, but not beyond their normal expiration date;

(e)

All of your unvested and outstanding restricted stock and/or restricted stock units and any other type of equity awards that are then unvested and outstanding, in each case, as of the date on which the Employment Term ends shall vest and, subject to any prior deferral election, be settled within ten (10) business days after your Termination Date; provided , however , that in the event and limited to the extent that compliance with the performance-based compensation exception is required in order to ensure the deductibility of any such award under Section 162(m) of the Code, such award shall vest if and to the extent the Compensation Committee certifies that a level of the performance goal(s) relating to such award has been met for the calendar year of termination, and, to the extent applicable, shall, subject to any prior deferral election, be settled within ten (10) business days thereafter, but in no event later than March 15 ^th of the calendar year after the calendar year in which the award was granted; provided , further , that in the event and to the extent that compliance with the performance-based compensation exception under Section 162(m) of the Code is not required in order to ensure the deductibility of any such equity awards, such equity awards shall immediately vest (with an assumption that the performance goal(s) were achieved at target level, if and to the extent applicable) and, subject to any prior deferral election, be settled within ten (10) business days thereafter;


(f)	You shall be provided, without charge to you, in either New York or Los Angeles at your election, suitable and appropriate office facilities (at a location within such city to be determined by Employer) and a personal secretary (who may be your choice of one of your personal secretaries providing services to you during the Employment Term, to

be compensated at the same compensation and benefits cost to Employer in effect immediately prior to your termination), until the conclusion of the Original Employment Term, or earlier upon your death, provided that nothing in this paragraph shall create any rights that are duplicative with any rights set forth in any other paragraph of this Agreement;

(g)

Employer will continue to provide you with life insurance coverage as set forth in paragraph 5(b), at the same level of coverage that was in effect immediately prior to the Termination Date and on terms and conditions under which the life insurance is provided that are no less favorable to you than those in effect immediately prior to the Termination Date, until the end of the Original Employment Term or, if earlier, the date on which you become eligible for at least as much insurance coverage as the coverage that was in effect at the time of your termination, from a third party employer at such employer’s expense; provided , however , that Employer may decrease the amount of premiums it pays towards life insurance coverage it provides you so long as the amount of such coverage that it continues to provide, combined with the amount of such coverage provided to you from a third party employer at such employer’s expense, aggregates at least the amount of coverage that was in effect for you at the time of your termination as a result of Employer’s obligations as set forth in paragraph 5(b);

(h)

You and your eligible dependents shall be entitled to continued participation at your sole cost, in all medical, dental and hospitalization benefit plans or programs (the “ Health and Welfare Benefits ”) in which you and/or they were participating on the date of the termination of your employment until the earlier of (i) 36 months following termination of your employment and (ii) the date, or dates, you receive equivalent coverage and benefits under the plans and programs of a subsequent employer (the “ Continuation Period ”); but only to the extent that you make a payment to Employer in an amount equal to the monthly premium payments (both the employee and employer portion) required to maintain such coverage for a similarly situated active employee (and such employee’s dependents) of Employer on or before the first day of each calendar month commencing with the first calendar month following the Termination Date and Employer shall reimburse you (on a tax-grossed up basis) for the amount of

such premiums, if any, in excess of any employee contributions necessary to maintain such coverage for the Continuation Period; provided , however , that, in the event Employer is unable to provide you with the Health and Welfare Benefits during the Continuation Period under the terms of the applicable Employer plan(s), Employer shall obtain comparable coverage for you and your dependents at no additional cost to you (including on a tax-grossed up basis, if applicable) during the Continuation Period. The period of continuation coverage to which you are entitled under Section 4980B(f) of the Code shall run concurrently with the Continuation Period;


(i)	For purposes of calculating your plan benefit under any SERP, you shall be credited with additional age and service credit equal to the lesser of (i) three (3) years or (ii) the period elapsed from the Termination Date to the end of the Original Employment Term (the “ SERP Credit ”);

(j)

You will receive a cash payment equal to Fifteen Million Dollars ($15,000,000), if your Termination Date occurs prior to the 2021 RSU Grant Date; provided , that if your employment terminates pursuant to paragraph 10(b), the amount set forth in this clause (j) shall be prorated based on the number of days which has elapsed during the 12-month period beginning on the RSU Grant Date immediately preceding your Termination Date (if your Termination Date occurs prior to the 2018 Grant Date, the last Annual RSU Grant Date shall be deemed to be February 23, 2017);

(k)

If, following your termination of employment pursuant to paragraph 10(b) or 10(c), you do not notify Employer within thirty (30) days following your Termination Date that you wish to provide Producer Services (as defined in and in accordance with paragraph 12(c)), you will receive a payment equal to Ten Million Dollars ($10,000,000). Your receipt of such payment constitutes a waiver of any claims, whether known or unknown, that you may have against Employer related to a Production Agreement (as defined in paragraph 12(c)); and


(l)	You will receive ( x ) grants of shares of Class B Common Stock earned as the Performance Awards (if any) pursuant to (and at the time provided in) Schedules A , B and C , and ( y ) payment of the Cash Performance Award (if any) pursuant to (and at the time provided in) Schedule D , in each case subject to paragraphs 10(d)(iv) and 10(d)(v).

(iii)

Timing of Payments and Settlement . Subject to paragraphs 10(d)(iv) and (v), (A) the portion of each of your Accrued Compensation and Benefits scheduled to be paid in cash upon your termination of employment shall be paid in a lump sum within 30 days after the Termination Date; (B) payment of the Pro-Rata Bonus will be made in accordance with paragraph 3(b)(vi) hereof; (C) payment of the cash amount described in paragraph 10(d)(ii)(j) shall be made in a lump sum within 30 days after the Termination Date, and payment of the cash amount described in paragraph 10(d)(ii)(k) (if any) shall be made in a lump sum within 60 days after the Termination Date; (D) all outstanding and unvested stock options, restricted stock and/or restricted stock units shall be treated as described in paragraphs 10(d)(ii)(d) and (e); and (E) any incremental plan benefits resulting from Employer’s application of the SERP Credit will be paid at the same time and in the same form as your plan benefits are scheduled to be paid under the terms of the SERP. Payment of the awards described in paragraph 10(d)(ii)(l) shall be made in accordance with the terms of Schedules A , B , C and D .

Subject to paragraphs 10(d)(iv) and (v), 50% of the Severance Payment shall be paid in a lump sum within 30 days after the Termination Date, and the remaining 50% of the Severance Payment will be paid in equal installments in accordance with the Company’s regular payroll practices over a period of 36 months, beginning with the first payroll period following the Termination Date.

Notwithstanding the foregoing, to the extent that any payments and benefits set forth in paragraph 10(d)(ii) constitute “deferred compensation” (within the meaning of Section 409A (or any successor provisions) of the Code and the rules and regulations promulgated thereunder (“ Section 409A ”)), then for purposes of this paragraph 10(d)(iii), the references to “Termination Date” in the preceding two sentences shall be deemed to refer to the first business day following the expiration of the 60-day period described in paragraph 10(d)(iv)(b) below.

Anything in this Agreement to the contrary notwithstanding, your entitlement to any portion of the Severance Payment that has not yet been paid and your right to receive future payments and benefits (including payments under paragraph 12, office and secretarial services) will cease if you materially breach any of the provisions set forth in paragraph 8(a), 8(b), 8(c) (but only with

respect to a material breach involving strategic business or financial information) or 8(h) and after notice by Employer of such breach you fail to cure such breach within thirty (30) days following your receipt of such notice, assuming such breach is capable of cure. In the case of your material breach of any of the other provisions of paragraph 8, then in addition to any other rights or remedies Employer has under this Agreement or otherwise, nothing in this Agreement shall prevent Employer from seeking monetary damages and/or equitable relief in court. You may request from Employer at any time its view on whether a proposed activity or investment by you will breach the Non-Compete Covenant described in paragraph 8(a) and/or the Non-Solicit Covenant described in paragraph 8(b) by giving Employer written notice of the details of such activity or investment, and Employer will respond to your inquiry within ten (10) business days of its receipt of such notice. Employer’s view as conveyed to you that the proposed activity or investment will not breach the applicable provisions of paragraph 8(a) and/or 8(b) shall be binding on it to the extent that the activity or investment does not exceed what was described in the notice. Your giving notice shall not be deemed an admission by you that the proposed activity or investment would violate the applicable provisions of paragraph 8(a) and/or 8(b). Employer’s failure to respond with its view within ten (10) business days of its receipt of notice shall not constitute or be construed as an acknowledgment by Employer that the proposed activity or investment will not breach the provisions of paragraph 8(a) and/or 8(b), but such failure shall create an irrebuttable presumption that any breach arising from such activity or investment is capable of cure. For the avoidance of doubt, nothing in this paragraph 10(d)(iii), including the requirement that Employer give you a notice of a breach of paragraph 8(a) and/or 8(b), shall preclude Employer from seeking an immediate injunction or other equitable relief for any breach or threatened breach of provisions of paragraph 8.


(iv)	Full Discharge of Company Obligations; Release .

(a)

The payments and other benefits provided for in paragraph 10(d)(ii) (and, as applicable, paragraphs 12(h)(iii) and 12(i)(iii)) are in lieu of any severance or income continuation or protection under any plan Employer or any of its subsidiaries that may now or hereafter exist. The payments and benefits to be provided pursuant to paragraph 10(d)(ii) (and, as applicable, paragraphs 12(h)(iii) and 12(i)(iii)) ( x ) shall constitute liquidated damages, and not a penalty; ( y ) shall be considered your exclusive remedy upon termination of your employment pursuant to

paragraph 10(b) or 10(c), termination of the Advisor Period for the reason set forth in paragraph 12(h)(iii) or termination of the Producer Period for the reason set forth in paragraph 12(i)(iii), as applicable; and (z) shall be deemed to satisfy and be in full and final settlement of all obligations of Employer to you under this Agreement. You acknowledge and agree that such amounts are fair and reasonable, and your sole and exclusive remedy, in lieu of all other remedies at law or in equity, with respect to the termination of your employment hereunder.

(b)

Employer’s obligation to make the Severance Payment and to pay or provide the other benefits set forth in paragraph 10(d)(ii) other than the Accrued Compensation and Benefits shall be conditioned on your execution of a release (the “ Release ”) (with all periods for revocation set forth therein having expired) in form and substance substantially identical to that set forth in Schedule E within 60 days following your termination of employment (the “ Release Condition ”). The Release shall not be effective unless and until Employer executes the Release. For avoidance of doubt, the execution or non-execution by Employer of the Release shall not affect whether or not the Release Condition has been satisfied.

(c)

To the extent any payments and benefits set forth in paragraph 10(d)(ii) do not constitute “deferred compensation”, then if, at the time any such payments or benefits are scheduled to be paid to you pursuant to paragraph 10(d)(iii), you have not satisfied the Release Condition, such payments and benefits shall be held and accumulated without interest, and shall be paid to you on the first regular payroll date following the effective date of the Release. If the maximum period in which the Release may be executed (with all periods for revocation set forth therein having expired) ends in the calendar year following the calendar year in which you incur a Separation from Service, the Release Condition shall be deemed not to have been satisfied until the later of (i) the first business day in the year following the year in which you incur a Separation from Service or (ii) the date that the Release Condition is satisfied (without regard to this sentence).


(v)	Section 409A Delay . Notwithstanding any provisions of paragraphs 3(a), 4, 9, 10 and 12 to the contrary, if you are a “specified employee” (within the meaning of Section 409A) at the time of your Separation from Service, and if any portion of the

payments or benefits to be received by you under paragraphs 3(a), 4, 9, 10 and 12 of this Agreement or under Schedules A , B , C and D upon your Separation from Service would be considered deferred compensation under Section 409A, then the following provisions shall apply to each such portion.

(a)

Each portion of such payments and benefits that would otherwise be payable pursuant to paragraphs 3(a), 4, 9, 10 and 12 and Schedules A , B , C and D during the six-month period immediately following your Separation from Service (the “ Delayed Period ”) shall instead be paid or made available on the earlier of (i) the first business day of the seventh month following the date you incur a Separation from Service or (ii) your death (the applicable date, the “ Permissible Payment Date ”).


(b)	Employer shall reimburse you for the reasonable after-tax cost of any welfare benefits, contemplated by paragraphs 9, 10 and 12, incurred by you in independently obtaining (or otherwise paying amounts to Employer to obtain) such benefits during the Delayed Period, with such reimbursement to be paid to you by Employer on the Permissible Payment Date.

(c)

With respect to any amount of expenses eligible for reimbursement under paragraphs 9, 10 and 12, such expenses shall be reimbursed by Employer within 60 calendar days (or, if applicable, on the Permissible Payment Date) following the date on which Employer receives the applicable invoice from you (and approves such invoice) but in no event later than December 31 ^st of the calendar year following the calendar year in which you incur the related expenses, or in the case of payment contemplated by paragraph 10(v)(e), December 31 ^st of the calendar year following the calendar year in which the applicable taxes are remitted.


(d)	Any payments delayed under paragraphs 3(a), 9, 10 and 12 and Schedule D (other than the delayed settlement of equity-based awards subject to Section 409A, if any) as a result of the application of Section 409A shall accrue interest at Employer’s highest borrowing rate in effect on the Separation from Service and such interest shall be paid at the same time as the underlying delayed payment.


(e)	Excise Taxes . Notwithstanding anything herein to the contrary, in the event that it is determined by Employer, or

by the Internal Revenue Service (the “ IRS ”) pursuant to an IRS audit (an “ Audit ”) of your federal income tax return(s), that any payment or benefit provided to you hereunder or otherwise, would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties with respect to such excise tax (such excise tax, together with any interest or penalties thereon, is herein referred to as the “ Excise Tax ”), then Employer shall pay (either directly to the IRS as tax withholdings or to you as a reimbursement of any amount of taxes, interest and penalties paid by you to the IRS) both the Excise Tax and an additional cash payment (a “ Tax Neutralization Payment ”) in an amount that will place you in the same after-tax economic position that you would have enjoyed if the payment or benefit had not been subject to the Excise Tax. Employer will consult with its outside tax counsel at its expense, to the extent it reasonably deems appropriate, in making determinations pursuant to the preceding sentence. The amount of the Tax Neutralization Payment shall be calculated by Employer’s regular independent auditors based on the amount of the Excise Tax paid by Employer as determined by Employer or the IRS. If the amount of the Excise Tax determined by the IRS is greater than an amount previously determined by Employer, Employer’s auditors shall recalculate the amount of the Tax Neutralization Payment. Employer’s auditors shall provide you with detailed support for its calculations. Employer shall be responsible for the fees and expenses incurred by its auditors in making these calculations. You shall promptly notify Employer of any IRS assertion during an Audit that an Excise Tax is due with respect to any payment or benefit, but you shall be under no obligation to defend against such claim by the IRS unless Employer requests, in writing, that you undertake the defense of such IRS claim on behalf of Employer and at Employer’s sole expense. In such event, Employer may elect to control the conduct to a final determination through counsel of its own choosing and at its sole expense, of any audit, administrative or judicial proceeding involving an asserted liability relating to the Excise Tax, and you shall not settle, compromise or concede such asserted Excise Tax and shall cooperate with Employer in each phase of any contest.


(f)	Each payment under this Agreement shall be considered a “separate payment” and not of a series of payments for purposes of Section 409A.

(vi)

Reimbursement; In-Kind Benefits . In no event shall the reimbursements or in-kind benefits to be provided by Employer under this Agreement in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall your right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. In addition, in no event shall any such reimbursements be paid later than the last day of the calendar year following the calendar year in which the related expense was incurred.

(e) Election to Accelerate Advisory Role . Notwithstanding any provision of this Agreement to the contrary, you may elect to shorten the maximum Employment Term by two years ( i.e., to June 30, 2019) by providing an irrevocable written notice of such election (including via email) to each of the Chair of the Compensation Committee and the Senior Executive Vice President, Chief Administrative Officer and Chief Human Resources Officer of Employer on or before December 31, 2018. Such irrevocable election shall have the following consequences:


(i)	the Original Employment Term (defined in paragraph 1 of this Agreement) shall be deemed to expire on June 30, 2019;


(ii)	you shall not be entitled to any Bonus for any portion of the 2020 or 2021 calendar years, and references to the partial calendar year 2021 in paragraphs 3(b)(ii), 3(b)(v) and 3(b)(vi) shall instead be applicable and refer to the partial calendar year 2019;


(iii)	you shall not be eligible to receive any Discretionary Option Grants or Annual RSUs in 2020 or 2021;


(iv)	the 2017 Performance Share Award (as described in paragraph 4(c)(iii) and Schedule C ) and the Cash Performance Award (as described in paragraph 4(d) and Schedule D ) shall be forfeited;


(v)	any outstanding “CEO Grants” (as defined in paragraph 12(e)(ii) of this Agreement) shall be (A) forfeited in the event of your termination under circumstances described in paragraph 12(h)(i) or 12(i)(i), or (B) accelerated in the event of your termination under circumstances described in paragraph 12(h)(ii), 12(h)(iii), 12(i)(ii) or 12(i)(iii); and


(vi)	the grant value of the “Additional RSUs” (as described in paragraph 12(g) below) shall be reduced to Ten Million Five Hundred Thousand Dollars ($10,500,000).

Notwithstanding the foregoing, if your employment is terminated by Employer under circumstances described in paragraph 10(b) or 10(c) on or before June 30, 2019, any election you may have made pursuant to and in accordance with this

paragraph 10(e) of this Agreement shall have no force or effect, except that the consequences described in clauses (ii) through (vi) above shall be applicable.

11. Death . If you die during the Employment Term, your beneficiary or estate shall be entitled to receive the following:


(i)	Employer will pay your Accrued Compensation and Benefits through the date of your death;

(ii)

Employer will pay a prorated Bonus for the year of your death based on your Target Bonus and the number of calendar days elapsed during the year through the date of your death (the date of such payment for purposes of Section 409A shall be the date of your death, and such payment shall be made not later than February 28 ^th of the calendar year following the calendar year in which your death occurs);


(iii)	all of your outstanding unvested Employer stock options will vest;


(iv)	all such options and all of your outstanding options that have previously vested will remain exercisable for the period provided for under the terms of the applicable award agreement;

(v)

all of your unvested and outstanding restricted stock and/or restricted stock units and any other type of equity awards will vest and, subject to any prior deferral election, be settled within ten (10) business days after the date of your death; provided , that to the extent any such unvested and outstanding equity awards remain subject to performance-based vesting conditions on the date of your death, such equity awards shall immediately vest (with an assumption that the performance goal(s) were achieved at target level, if and to the extent applicable) and, subject to any prior deferral election, be settled within ten (10) business days thereafter; and


(vi)	You will receive ( x ) grants of shares of Class B Common Stock earned as the Performance Awards (if any) pursuant to (and at the time provided in) Schedules A , B and C , and ( y ) payment of the Cash Performance Award (if any) pursuant to (and at the time provided in) Schedule D .

12. Senior Advisor or Producer .

(a) Continuation as Advisor; Term . Upon the earlier of (i) the end of the Employment Term as a result of the termination of your employment pursuant to paragraph 10(b) or 10(c), or (ii) the expiration of the Original Employment Term (provided you remained employed and are being paid on Employer’s payroll through the

end of the Original Employment Term and there has not occurred a renewal of the Employment Term), unless you elect otherwise by providing written notice to Employer, your employment shall continue in a different capacity as a Senior Advisor (an “ Advisor ”) to the Company for a period of five years (the “ Advisor Period ”), subject to earlier termination of the Advisor Period in accordance with this paragraph 12. The Advisor Period may be terminated by (i) you at any time upon fourteen (14) days’ prior written notice to Employer, (ii) Employer for Cause, as determined in accordance with paragraph 10(a), but without regard to clause (v) of such definition, or (iii) by Employer for any other reason. The termination of the Advisor Period pursuant to clauses (i) or (ii) in the preceding sentence is hereinafter referred to as a “ Non-Qualifying Termination .” The date on which the Advisor Period commences is hereinafter referred to as the “ Commencement Date .” The period beginning on the Commencement Date and ending immediately prior to the fifth anniversary of the Commencement Date, regardless of any earlier termination of the Advisor Period, shall hereinafter be referred to as the “ Original Advisor Period .”

(b) Advisory Services to be Provided During Advisor Period . During the Advisor Period, you shall provide such advisory services concerning the business, affairs and management of Employer and its subsidiaries as may be reasonably requested by the Chairman or the Chief Executive Officer of Employer (the “ Advisory Services ”), but you shall not be required to devote more than five (5) days (up to eight (8) hours per day) each month to such services which shall be performed at a time and place mutually convenient to you and Employer. You may accept other employment during the Advisor Period with any charitable, educational, religious or entertainment industry trade, public interest or public service organization and you may provide services to third parties (including serving as a member of the board of directors of any such party and any entity on which you have already been elected to serve during the Employment Term), provided that such services or the entity to whom you are providing such services is not in competition with Employer or any of its subsidiaries (“ Permitted Services ”). Any compensation or fees earned by you from Permitted Services shall not reduce the compensation payable by Employer under paragraphs 10(d) or 12.

(c) Producer Services to be Performed . During the Advisor Period, you shall not be required to provide any services as a Producer (“ Producer Services ”) unless and until you notify Employer in writing and within thirty (30) days following either the expiration of the Original Employment Term or your Termination Date pursuant to paragraph 10(b) or 10(c), as applicable, that you desire to provide services as a Producer (the “ Producer Notice ”). Employer shall notify you in writing at least two weeks prior to the expiration of such 30-day notice period if it has not received the Producer Notice (the “ Employer Notice ”).

If Employer timely provides you the Employer Notice, but you do not provide the Producer Notice to Employer within the prescribed 30-day period, Employer shall have no further obligation to you related to negotiation of a Production Agreement or your provision of Producer Services, subject to the last sentence of paragraph 12(h), if applicable; provided , that if your employment was terminated pursuant to paragraph 10(b) or 10(c) prior to the end of the Original Employment Term

and you do not provide such Producer Notice, then pursuant to paragraph 10(d)(ii)(k) Employer will pay you Ten Million Dollars ($10,000,000) in accordance with the schedule set forth in paragraphs 10(d)(ii)(k) and 10(d)(iii).

If you provide the Producer Notice while you are an Advisor and within the prescribed 30-day period, the material terms set forth in the letter agreement between you and Employer dated December 11, 2014, as modified by paragraph 12(l) of this Agreement (as modified, the “ Supplemental Agreement ”), shall, effective as of the Commencement Date, constitute a binding production agreement. You and Employer (or an appropriate subsidiary of Employer) shall thereafter endeavor to enter into a binding long-form production agreement within sixty (60) days following the Commencement Date. The long-form production agreement (i) shall be negotiated in good faith; (ii) shall amend or supersede the Supplemental Agreement and have a term which commences effective as of the Commencement Date; (iii) shall recognize your experience in the industry, your skills and understanding of the Company; and (iv) shall contain substantive provisions relating to television and film production similar to comparable agreements entered into by the Company with a producer during the 36-month period preceding the Commencement Date, including the terms of the Supplemental Agreement. The Supplemental Agreement or, if you and Employer are able to reach agreement on a long-form production agreement, such long-form production agreement shall hereinafter be referred to as the “ Production Agreement .” The term of any such Production Agreement, subject to earlier termination as may be set forth in the Production Agreement, shall be referred to herein as the “ Producer Period ,” and the term of any such Production Agreement, assuming no earlier termination of the term of such agreement, shall hereinafter be referred to as the “ Original Producer Period .”

If you and Employer are not parties to a Production Agreement, you acknowledge and agree that, during the period in which you serve in the capacity as an Advisor to the Company and for a one-year period thereafter, but in no event beyond the Original Advisor Period, you shall be required to submit to Employer (or an appropriate subsidiary of Employer), on an exclusive First Look (as defined herein) basis, all Projects (as defined herein) for Employer’s consideration for potential acquisition, development, production and/or distribution by Employer. If you and Employer are parties to a Production Agreement, you acknowledge and agree that, during the period in which you serve in the capacity as a Producer to the Company and for a one-year period thereafter, but in no event beyond the Original Producer Period, you shall be required to submit to Employer (or an appropriate subsidiary of Employer), on an exclusive First Look basis, all Projects for Employer’s consideration for potential acquisition, development, production and/or distribution by Employer; provided , however , that if your Production Agreement includes a First Look (or similar) provision(s) containing terms different than those set forth in the following paragraph, the terms of such provision(s) shall apply with respect to any Project(s) specifically contemplated therein. As used herein, “ First Look ” means that a Project shall be submitted in writing solely and exclusively to an individual specifically designated by Employer for such purpose (your “ Project Contact ”) before it is submitted by you or on your behalf to any other person or entity; and “ Project ” means any idea, concept, story or other literary work intended by you or on your behalf for initial exploitation via any means of audio-visual

exhibition, including, without limitation, television, motion-picture or theatrical exhibition.

Employer shall notify you of the name and contact information of your Project Contact as promptly as practicable following the Commencement Date, provided , however , that Employer shall have the right to change your Project Contact from time to time with reasonable prior written notice to you. Employer shall have thirty (30) days following your submission of a Project in which to notify you of its acceptance or rejection of the Project (reducible to fifteen (15) days if you notify Employer at the time of submission that such Project is a “hot property”). In the event Employer rejects the Project (or fails to notify you of its acceptance of such Project in writing during the foregoing consideration period), you shall be free to submit the Project to any other person or entity and enter into any agreement or arrangement with respect thereto, with no further obligation to Employer whatsoever with respect thereto (whether legal, financial or otherwise), except as otherwise provided below, and without such submission to another person or entity being a violation of the First Look obligation, provided , however , that in the event of a material change in a material element of the Project ( e.g., a material change in the development and/or production budget or a change in any key performer, producer, director or writer attached to the Project) prior to you entering into an agreement or arrangement with a third party with respect to such Project or such Project otherwise being set up with a third party, Employer shall be entitled to an additional First Look at the Project on the terms and conditions set forth herein and you shall re-submit the Project to Employer. In the event Employer accepts the Project by notifying you in writing during the consideration period, you shall negotiate exclusively and in good faith with Employer with respect thereto for a period of thirty (30) days (the “ Negotiation Period ”). If no agreement is reached by the end of the Negotiation Period or if Employer is otherwise unable to acquire any necessary third party rights with respect to such Project during the Negotiation Period, you may negotiate with third parties and/or enter into any agreement with third parties with respect to the Project, but you may not enter into any agreement with any third party on terms equally or less favorable to you than those last offered by you to Employer without first offering to Employer, by written notice specifying the name of such third party (if you are not otherwise prohibited from disclosing), the same terms and conditions of such agreement (the “ Third Party Agreement ”). Employer will have ten (10) days after Employer’s receipt of said offer to accept or reject all of the terms and conditions of the Third Party Agreement by notifying you in writing within such ten day period (with failure to so notify you within such period being deemed a rejection by Employer). Notwithstanding anything to the contrary contained herein, the non-competition provisions set forth herein shall not apply with respect to any agreement, arrangement, or services provided by you (or any of your affiliates) with respect to any Project which Employer has rejected or not accepted pursuant to the foregoing.

(d) Level of Services . Notwithstanding paragraphs 12(a), (b) and (c), it is the intent of the parties, and the parties hereby acknowledge, that for so long as the Advisor Period and/or Producer Period remains in effect, the level of bona fide services reasonably anticipated to be performed by you shall remain 45% or less of the average level of bona fide services performed by you during the 36-month period ending on the

last day of the Employment Term and, therefore, that your continuing to provide services as an Advisor and/or Producer following the expiration of the Employment Term shall not prevent you from being considered to have incurred a Separation from Service as of your Termination Date.

(e) Advisor Compensation and Benefits . During the Advisor Period you shall receive a salary at the rate of Five Million Dollars ($5,000,000) per annum (the “ Advisory Fees ”), which, for the avoidance of doubt, is in addition to any compensation and/or fees payable to you with respect to any services provided in your role as a Producer (the “ Producer Services ”). In addition, during the Advisor Period, subject to the provisions of the applicable plans or programs, including provisions relating to eligibility to participate:

(i)

the provisions of paragraphs 5(a), 5(b), 6(a) and 6(b) (but ( x ) in the case of paragraph 5(b), coverage will be provided at the same coverage level in effect immediately prior to the Commencement Date, and ( y ) in the case of paragraph 6(b), only with respect to Perquisites and consistent with Employer policies during the Advisor Period) shall continue to apply, other than the right to vacation accruals contemplated by paragraph 5(a) (collectively referred to as the “ Additional Compensation and Benefits ”). In the event Employer is unable to provide you with the Additional Compensation and Benefits due to your ineligibility to participate in the applicable Employer plans or programs during the Advisor Period, Employer shall obtain, during the Advisor Period, comparable coverage for you and your dependents with a contribution no greater than that contribution which would be required if you were an active employee covered under Employer’s plan; and

(ii)

your equity awards, including without limitation stock options, restricted stock, restricted stock units or any other form of equity awards you may have been granted prior to the date you became an Advisor (the “ CEO Grants ,” which specifically exclude the “Additional RSUs,” as defined in paragraph 12(g) below), to the extent not already vested or paid out, shall continue to vest or be paid out or exercisable, as the case may be, on their original schedule.

Additionally, during the Advisor Period, you shall be provided with: ( w ) in either New York or Los Angeles at your election, suitable and appropriate office facilities (at a location within such city to be determined by Employer); ( x ) a personal secretary (who may be your choice of one of your personal secretaries providing services to you during the Employment Term, to be compensated at the same compensation and benefits cost to Employer in effect immediately prior to the Commencement Date); ( y ) security services paid for by Employer consistent with the level of services provided by Employer immediately prior to the Commencement Date; and ( z ) use of private charter

aircraft ( e.g., “Net Jets”) comparable to a Gulfstream G-IV, taking into account your travel plans, number of passengers and similar considerations, for up to a total of 100 hours per calendar year (collectively, the “ Additional Benefits ”).

In no event shall the reimbursements or in-kind benefits to be provided by Employer in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall your right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. In addition, in no event shall any such reimbursements be paid later than the last day of the calendar year following the calendar year in which the related expense was incurred.

(f) Producer Compensation and Benefits . You will not receive any compensation or fees for the provision of any Producer Services, except as provided under the terms of a Production Agreement and as specifically set forth below:

(i)

during the Producer Period, the provisions of paragraphs 5(a), 5(b), 6(a) and 6(b) (but ( x ) in the case of paragraph 5(b), coverage will be provided at the same coverage level in effect immediately prior to the Commencement Date, and ( y ) in the case of paragraph 6(b), only with respect to Perquisites and consistent with Employer policies during the Advisor Period) shall continue to apply, other than the right to vacation accruals contemplated by paragraph 5(a) (collectively referred to as the “ Producer Period Benefits ”). In the event Employer is unable to provide you with the Producer Period Benefits due to your ineligibility to participate in the applicable Employer plans or programs during the Producer Period, Employer shall obtain, during the Producer Period, comparable coverage for you and your dependents with a contribution no greater than that contribution which would be required if you were an active employee covered under Employer’s plan;


(ii)	the CEO Grants, to the extent not already vested or paid out, shall continue to vest or be paid out or exercisable, as the case may be, on their original schedule; and


(iii)	during the Producer Period, Employer shall provide you with the Additional Benefits (the “ Additional Producer Benefits ”);

provided , however , that neither the Producer Period Benefits nor the Additional Producer Benefits shall be paid or provided to you by Employer to the extent such payments and benefits are paid or provided to you during any portion of the Advisor Period that runs concurrently with the Producer Period.

shall any such reimbursements be paid later than the last day of the calendar year following the calendar year in which the related expense was incurred.

(g) Equity Awards . In consideration of your covenants set forth in paragraph 12(j) and in order to retain your exclusive services as an Advisor (other than in connection with Permitted Services) during the periods described in paragraph 12, Employer agrees that upon the Commencement Date (or if the Commencement Date is not a trading day, on the first trading day after the Commencement Date) (the “ Additional RSU Grant Date ”), you will automatically be granted restricted stock units having a value equal to Fifteen Million Dollars ($15,000,000) (the “ Additional RSUs ”). The number of Additional RSUs granted on the Additional RSU Grant Date (rounded down to a whole unit for any fractional unit) shall be determined by dividing the value specified in the preceding sentence by the closing price of one share of Class B Common Stock on the Additional RSU Grant Date. Each Additional RSU shall correspond to one share of Class B Common Stock. The Additional RSUs shall vest in three (3) equal installments on each of the first, second and third anniversaries of the Commencement Date, subject to earlier acceleration or cancellations as provided in paragraph 12(h) or any deferral election.

(h) Consequences of Termination of the Advisor Period . Upon termination of the Advisor Period, in addition to any compensation you may be entitled to upon termination of the Producer Period:

(i)

in a Non-Qualifying Termination, Employer shall have no further obligations to you under the terms of paragraph 12 with respect to your role as an Advisor other than to promptly pay and provide you with Accrued Advisory Compensation and Benefits. For purposes of this Agreement, “ Accrued Advisory Compensation and Benefits ” shall consist of: (A) reimbursement of any unpaid business expenses to which you are entitled to reimbursement pursuant to paragraph 6 (and paragraph 12(e)) that were incurred prior to the effective date of the termination of the Advisor Period (such date, the “ Advisor Termination Date ”), (B) your Advisory Fees through the Advisor Termination Date, and (C) all other vested compensation and benefits to which you are entitled to as of the Advisor Termination Date under the terms and conditions applicable to such compensation and benefits. All of your then unvested Additional RSUs shall be cancelled upon the occurrence of a Non-Qualifying Termination. The Accrued Advisory Compensation and Benefits shall be paid in a lump sum within 30 days after the Advisor Termination Date.


(ii)	due to death or disability (as determined in accordance with your long-term disability plan coverage in effect during the Advisor Period), (A) the Additional RSUs shall become fully vested and, subject to any prior deferral election, be settled within ten (10) business days following the Advisor Termination Date; (B) in the

case of your termination due to disability, the provisions of paragraph 5(b) shall continue to apply for the duration of the Original Advisor Period (at the same coverage level in effect immediately prior to the Commencement Date); and (C) you shall be entitled to the Accrued Advisory Compensation and Benefits.

(iii)

for any reason other than as set forth in clauses (i) and (ii) above, (A) you shall be entitled to the Accrued Advisory Compensation and Benefits; (B) the Additional RSUs shall become fully vested and, subject to any prior deferral election, be settled within ten (10) business days following the Advisor Termination Date; and (C) Employer shall continue to provide you with the Additional Compensation and Benefits, the Advisory Fees and the Additional Benefits, in each case, for the duration of the Original Advisor Period in accordance with paragraph 12(e).

Additionally, if the Advisor Period is terminated by Employer ( x ) for any reason other than as set forth in clauses (i) and (ii) above, ( y ) before you provide the Producer Notice and ( z ) within the 30-day period following the expiration of the Original Employment Term, you will also receive a cash payment equal to Ten Million Dollars ($10,000,000), payable in a lump sum during the 60-day period beginning on the Commencement Date.

(i) Consequences of Termination of the Producer Period . Subject to any compensation and benefits to which you are entitled pursuant to the terms of a Production Agreement with the Company, upon termination of the Producer Period, in addition to any compensation you may be entitled to upon termination of the Advisor Period:

(i)

by you at any time upon fourteen (14) days’ prior written notice to Employer or by Employer for Cause (as determined in accordance with paragraph 10(a), but without regard to clause (v) of such definition), Employer shall have no further obligations to you under the terms of paragraph 12 of this Agreement with respect to your role as a Producer, or under any other agreement (including any Production Agreement), other than to promptly pay and provide you with Accrued Producer Compensation and Benefits. For purposes of this Agreement, “ Accrued Producer Compensation and Benefits ” shall consist of: (A) reimbursement of any unpaid business expenses to which you are entitled to reimbursement pursuant to paragraph 6 (and this paragraph 12) that were incurred prior to the effective date of the termination of the Producer Period (such date, the “ Producer Termination Date ”), and (B) all other vested compensation and benefits to which you are entitled to as of the Producer Termination Date under the terms and conditions applicable to such compensation and benefits. The Accrued Producer Compensation and Benefits

shall be paid in a lump sum within 30 days after the Producer Termination Date.

(ii)

due to death or disability (as determined in accordance with your long-term disability plan coverage in effect during the Producer Period), (A) in the case of your termination due to disability, the provisions of paragraph 5(b) shall continue to apply for the duration of the Original Producer Period (at the same coverage level in effect immediately prior to the Commencement Date); and (B) you shall be entitled to the Accrued Producer Compensation and Benefits.

(iii)

for any reason other than set forth in clauses (i) and (ii) above, (A) Employer shall continue to provide you with the Producer Period Benefits and the Additional Producer Benefits, in each case, for the duration of the Original Producer Period in accordance with paragraph 12(f); (B) you shall be entitled to the Accrued Producer Compensation and Benefits; and (C) Employer shall provide you with the “overhead reimbursement,” “television production guaranteed compensation” and “network penalty payments” (as described in Sections A.2, B.1 and D.3, respectively, of Exhibit A to the Supplemental Agreement) for the duration of the Original Producer Period, payable in accordance with a schedule(s) to be set forth in the Production Agreement.

(j) Covenants . The parties hereby agree that (i) the provisions of paragraph 8 are hereby incorporated by reference into this paragraph 12 and shall continue to apply during the period commencing on the Commencement Date and ending on the later of the termination of the Advisor Period and the termination of the Producer Period (such period, the “ Extended Restriction Period ”) (other than with respect to any Project which Employer has rejected or failed to accept appropriately pursuant to the First Look), and any period set forth in the provisions of paragraph 8 that survives any termination of employment or the Employment Term shall survive for the same duration following termination of the Extended Restriction Period, and (ii) the provisions of paragraph 8(a), 8(b) and 8(f) that would otherwise terminate upon the expiration of the Original Employment Term shall continue to apply following the expiration of the Original Employment Term during the Extended Restriction Period, and shall remain in effect as follows: ( x ) with respect to paragraphs 8(a) and 8(b), until the first anniversary of the termination of the Extended Restriction Period, unless such Extended Restriction Period terminates as a result of the expiration of the Original Advisor Period or the Original Producer Period (in which case the provisions of paragraphs 8(a) and 8(b) shall end on the last day of the Original Advisor Period or the Original Producer Period, as the case may be), and ( y ) with respect to paragraph 8(f), until the second anniversary of the termination of the Extended Restriction Period, unless such Extended Restriction Period terminates as a result of the expiration of the Original Advisor Period or the Original Producer Period (in which case the provisions of paragraph 8(f) shall end on the last day of the Original Advisor Period or the Original Producer Period, as the case may be).

Notwithstanding the foregoing, if you and Employer enter into a Production Agreement as contemplated in paragraph 12(c), the provisions of paragraph 8 shall not apply to you in your capacity as a Producer during the Producer Period to the extent any activity or conduct described in such provisions is specifically authorized under the terms of your Production Agreement.

(k) Release . Notwithstanding anything in this Agreement or in any Production Agreement with Employer to the contrary :

(i)

Employer’s obligation to make the payments and provide the benefits set forth in paragraph 12(h)(iii) of this Agreement other than the Accrued Advisory Compensation and Benefits shall be conditioned on your execution of a release (the “ Advisor Release ”) (with all periods for revocation set forth therein having expired) in form and substance substantially identical to that set forth in Schedule E within 60 days following the termination of the Advisor Period (the “ Advisor Release Condition ”). The Advisor Release shall not be effective unless and until executed by Employer; provided , however , that execution or non-execution by Employer of the Advisor Release shall not affect whether or not the Advisor Release Condition has been satisfied. If the maximum period in which the Advisor Release may be executed (with all periods for revocation set forth therein having expired) ends in the calendar year following the calendar year in which the Advisor Termination Date occurs, then the Advisor Release Condition shall be deemed not to have been satisfied until the later of (i) the first business day in the year following the year in which the Advisor Termination Date occurs or (ii) the date on which the Advisor Release Condition is satisfied (without regard to this sentence).

(ii)

Employer’s obligation to make the payments and provide the benefits set forth in paragraph 12(i)(iii) (other than the Accrued Producer Compensation and Benefits) of this Agreement or under any Production Agreement with Employer shall be conditioned on your execution of a release (the “ Producer Release ”) (with all periods for revocation set forth therein having expired) in form and substance substantially identical to that set forth in Schedule E within 60 days following the termination of the Producer Period (the “ Producer Release Condition ”). The Producer Release shall not be effective unless and until executed by Employer; provided , however , that execution or non-execution by Employer of the Producer Release shall not affect whether or not the Producer Release Condition has been satisfied. If the maximum period in which the Producer Release may be executed (with all periods for revocation set forth therein having expired) ends in the calendar year following the calendar year in which the Producer Termination Date occurs, then the Producer Release Condition

shall be deemed not to have been satisfied until the later of (i) the first business day in the year following the year in which the Producer Termination Date occurs or (ii) the date on which the Producer Release Condition is satisfied (without regard to this sentence).

If, at the time any payments or benefits are scheduled to be paid to you pursuant to paragraph 12(h)(iii) or 12(i)(iii), as applicable, you have not satisfied the Advisor Release Condition or the Producer Release Condition, as applicable, then any such payments and benefits shall be held and accumulated without interest, and shall be paid to you on the first regular payroll date following the effective date of the Advisor Release or the Producer Release, as applicable.

Your failure or refusal to sign and deliver the Advisor Release or the Producer Release, as applicable, or your revocation of an executed and delivered Advisor Release or Producer Release, as applicable, in accordance with applicable laws, whether intentionally or unintentionally, will result in the forfeiture of the payments and benefits under paragraph 12(h)(iii) or 12(i)(iii), as applicable.

(l) The material terms set forth in the letter agreement between you and Employer dated December 11, 2014 are hereby modified such that the initial annual overhead reimbursement amount specified in Section A.2 of Exhibit A shall be increased by fifty percent (50%).

(m) Nothing in this paragraph 12 shall create any rights that are duplicative with any rights set forth in any other paragraph of this Agreement.

13. No Mitigation . You shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall any reduction of such amounts be made for any other compensation that you earn from a subsequent employer (including self-employment).

14. Section 317 and 507 of the Federal Communications Act . You represent that you have not accepted or given nor will you accept or give, directly or indirectly, any money, services or other valuable consideration from or to anyone other than Employer for the inclusion of any matter as part of any film, television program or other production produced, distributed and/or developed by Employer and/or any of Employer’s affiliates.

15. Equal Opportunity Employer; Employer Business Conduct Statement . You acknowledge that Employer is an equal opportunity employer. You agree that you will comply with Employer policies regarding employment practices and with applicable federal, state and local laws prohibiting discrimination on the basis of race, color, creed, national origin, age, sex or disability. In addition, you agree that you will comply with Employer’s Supplemental Code of Ethics for Senior Financial Officers and Employer’s Business Conduct Statement.

16. Indemnification .

(a) If you are made a party, are threatened to be made a party to, or otherwise receive any other legal process in, any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”), by reason of the fact that you are or were a director, officer or employee of Employer or are or were serving at the request of Employer as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is your alleged action in an official capacity while serving as director, officer, member, employee or agent, Employer shall indemnify you and hold you harmless to the fullest extent permitted or authorized by Employer’s certificate of incorporation and bylaws or, if greater, by the laws of the State of Delaware, against all cost, expense, liability and loss (including without limitation, attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement and any cost and fees incurred in enforcing your rights to indemnification or contribution) reasonably incurred or suffered by you in connection therewith, and such indemnification shall continue even though you have ceased to be a director, member, employee or agent of Employer or other entity and shall inure to the benefit of your heirs, executors and administrators. Employer shall advance to you all reasonable costs and expenses that you incur in connection with a Proceeding within twenty (20) days after its receipt of a written request for such advance. Such request shall include an undertaking by you to repay the amount of such advance if it shall ultimately be determined that you are not entitled to be indemnified against such costs and expenses.

(b) Neither the failure of Employer (including its board of directors, independent legal counsel or stockholders) to have made a determination that indemnification of you is proper because you have met the applicable standard of conduct, nor a determination by Employer (including its board of directors, independent legal counsel or stockholders) that you have not met such applicable standard of conduct, shall create a presumption or inference that you have not met the applicable standard of conduct.

(c) To the extent that Employer maintains officers’ and directors’ liability insurance, you will be covered under such policy subject to the exclusions and limitations set forth therein.

(d) The provisions of this Section 16 shall survive the expiration or termination of your employment and/or this Agreement.

17. Notices . All notices required to be given hereunder shall be given in writing, by personal delivery or by mail at the respective addresses of the parties hereto set forth above, or at such other address as may be designated in writing by either party, and in the case of Employer, to the attention of the Senior Executive Vice President, Chief Legal Officer of Employer. Any notice given by mail shall be deemed to have been given three days following such mailing. Copies of all notices to you shall be given to

Grubman Shire & Meiselas, P.C., Carnegie Hall Tower, 152 W. 57 ^th Street, New York, NY 10019, Attention: Allen J. Grubman, Esq. and Eric D. Sacks, Esq.

18. Assignment and Successors . This is an Agreement for the performance of personal services by you and may not be assigned by you or Employer except that Employer may assign this agreement to any affiliate of Employer or any successor in interest to Employer, provided such assignee assumes all of the obligations of Employer hereunder.

19. New York Law . This Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of New York, without giving effect to the conflicts of laws principles thereof or to those of any other jurisdiction which, in either case, could cause the application of the laws of any jurisdiction other than the State of New York.

20. Disputes . Any disputes between the parties to this Agreement shall be settled by arbitration in New York, New York under the auspices of the American Arbitration Association, before a panel of three (3) arbitrators, in accordance with the National Rules for the Resolution of Employment Disputes promulgated by the Association. Each party shall select an arbitrator and the two (2) arbitrators shall select a third and these three arbitrators shall form the panel. The decision in such arbitration shall be final and conclusive on the parties and judgment upon such decision may be entered into in any court having jurisdiction thereof. Costs of the arbitration or litigation, including, without limitation, reasonable attorneys’ fees and expenses of both parties, shall be borne by Employer if you prevail on at least one of the material issues that is the subject of the arbitration. If you do not so prevail, you and Employer shall equally share costs of the arbitration or litigation other than attorneys’ fees, and each of you and Employer shall bear its own attorneys’ fees and expenses. Nothing herein shall prevent Employer from seeking equitable relief in court as provided for in paragraph 8(i) or shall prevent either party from seeking equitable relief in court in aid of arbitration under applicable law.

21. No Implied Contract . Nothing contained in this Agreement shall be construed to impose any obligation on Employer to renew this Agreement or any portion thereof. The parties intend to be bound only upon execution of a written agreement and no negotiation, exchange of draft or partial performance shall be deemed to imply an agreement. Neither the continuation of employment nor any other conduct shall be deemed to imply a continuing agreement upon the expiration of this Agreement.

22. Entire Understanding; Amendments . This Agreement contains the entire understanding of the parties hereto relating to the subject matter herein contained, and supersedes the Prior Agreement, provided , however , that no provision in this Agreement shall be construed to adversely affect any of your rights with respect to equity awards granted on or prior to the Start Date pursuant to the terms of the Prior Agreement. This Agreement can be amended only by a writing signed by both parties hereto.

23. Waivers . Waiver by either you or by Employer of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or his rights hereunder on any occasion or series of occasions.

24. Void Provisions . If any provision of this Agreement, as applied to either party or to any circumstances, shall be adjudged by a court to be void or unenforceable, the same shall be deemed stricken from this Agreement and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement.

25. Deductions and Withholdings, Payment of Deferred Compensation . All amounts payable under this Agreement shall be paid less deductions and income and payroll tax withholdings as may be required under applicable law and any benefits and perquisites provided to you under this Agreement shall be taxable to you as may be required under applicable law.

26. Section 409A . To the extent applicable, it is intended that the compensation arrangements under this Agreement be in full compliance with Section 409A. This Agreement shall be construed in a manner to give effect to such intention. In no event whatsoever (including, but not limited to as a result of this paragraph 26 or otherwise) shall Employer or any of its subsidiaries or affiliates be liable for any tax, interest or penalties that may be imposed on you under Section 409A. Neither Employer nor any of its subsidiaries or affiliates has any obligation to indemnify or otherwise hold you harmless from any or all such taxes, interest or penalties, or liability for any damages related thereto. You acknowledge that you have been advised to obtain independent legal, tax or other counsel in connection with Section 409A.

27. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

28. Headings . The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. Unless otherwise expressly provided for in this Agreement, the word “including” or any variation thereof means “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it. References to the word “day” or “days” shall be deemed to refer to “calendar day” or “calendar days” unless otherwise provided.

[signature page to follow]

If the foregoing correctly sets forth our understanding, please sign, date and return all four (4) copies of this Agreement and return it to the undersigned for execution on behalf of Employer; after this Agreement has been executed by Employer and a fully executed copy returned to you, it shall constitute a binding agreement between us.



		Very truly yours,

		CBS CORPORATION


		By:	/s/ Anthony G. Ambrosio
			Name:	Anthony G. Ambrosio
			Title:	Senior Executive Vice President,
				Chief Administrative Officer and
				Chief Human Resources Officer





ACCEPTED AND AGREED:


/s/ Leslie Moonves
Name: Leslie Moonves

Dated:	5/19/17

SCHEDULE A

2015 Performance Award

Part A : Number of Shares Earned Based on Stock Price Performance



Final Stock Price (% of Initial Stock Price)	# of Shares Earned*
Below 124.60%	0
124.60%	250,000
130.04%	290,000
135.67%	330,000
141.50%	370,000
147.52%	410,000
153.73%	450,000**
160.15%	490,000
166.79%	530,000
173.65%	570,000
180.71%	610,000
188.02%	650,000
Above 188.02%	650,000

* Number of shares earned between percentages shown in above table will be determined through straight-line interpolation.

** The target 2015 Performance Award (the “ 2015 Target Performance Award ”) shall be 450,000 shares of Class B Common Stock.

Part B : Modifier to Number of Shares Earned



PRSU Performance Goal Percentage Achievement	Modifier***
Below Threshold ( i.e. , <80%)	0.9
Threshold ( i.e. , 80%)	0.9
Target ( i.e. , 100%)	1.0
Maximum ( i.e. , 120%)	1.1
Above Maximum ( i.e. , >120%)	1.1

*** Modifier between levels determined through straight-line interpolation.

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1.	Determination of the Number of Shares to be Granted :

(a) (i) On June 30, 2019, subject to your continued employment with Employer through such date (subject to paragraphs 1(b), 1(c), 1(d), 2 and 3 of this Schedule A ), the Compensation Committee will determine the number of shares of Class B Common Stock to be granted to you as the 2015 Performance Award based on the performance of the Class B Common Stock over the period beginning January 1, 2015 and ending June 30, 2019 (the “ Performance Period ”).

(ii) Within thirty (30) days following the end of the Performance Period, the Compensation Committee will certify the “Final Stock Price” (as defined below) that was achieved during the Performance Period, expressed as a percentage of the “Initial Stock Price” (as defined below). The number of shares of Class B Common Stock earned based on such percentage is referred to herein as the “ Initial Performance Shares .” If the Final Stock Price for the Performance Period falls at an intermediate point between percentages shown in the table in Part A above, the number of Initial Performance Shares shall be interpolated on a straight-line basis between the respective numbers of shares earned at such percentages. Fractional shares will be rounded to the next higher whole share.

(iii) Once the Compensation Committee has determined the number of Initial Performance Shares, such number shall be divided into thirds with one-third allocated to each of the 2016, 2017 and 2018 calendar years (each, a “ Performance Year ”). With respect to each such Performance Year, the number of Initial Performance Shares allocated to such year shall be adjusted based on the Company’s degree of achievement against the PRSU Performance Goal established for the Performance Year as reflected in the table in Part B above. For avoidance of doubt, the portion of the Initial Performance Shares allocated to any Performance Year shall be increased or decreased by no more than 10%. Following adjustment for the Company’s performance for each Performance Year, the aggregate performance-adjusted number of Initial Performance Shares (the “ Final Performance Shares ”) shall be granted to you as soon as practicable, but in no event later than sixty (60) days following June 30, 2019, subject to paragraph 10(d)(v) of the Agreement and paragraphs 1(b), 1(c), 1(d), 2 and 3 of this Schedule A .

(b) In the event your employment is terminated in accordance with paragraph 10(b) or 10(c) prior to June 30, 2019, you shall remain eligible to receive shares of Class B Common Stock as the 2015 Performance Award following the conclusion of the Performance Period, determined in accordance with paragraph 1(a) of this Schedule A . Shares of Class B Common Stock to be granted pursuant to this paragraph 1(b) shall be granted to you as soon as practicable following June 30, 2019, but in no event later than sixty (60) days following such date, subject to paragraphs 10(d)(iv) and 10(d)(v) of the Agreement, as applicable, and paragraphs 1(d), 2 and 3 of this Schedule A .

(c) In the event your employment terminates prior to June 30, 2019 due to your incapacity in accordance with paragraph 9 or your death in accordance with

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paragraph 11, you shall remain eligible to receive shares of Class B Common Stock as the 2015 Performance Award following the conclusion of the Performance Period, determined in accordance with paragraph 1(a) of this Schedule A , and then prorated based on the number of calendar days of the Performance Period which have elapsed through the date of your death or termination due to incapacity. Shares of Class B Common Stock to be granted pursuant to this paragraph 1(c) shall be granted to you (or your estate or beneficiary, if applicable) as soon as practicable following June 30, 2019, but in no event later than sixty (60) days following such date, subject to paragraph 10(d)(v) of the Agreement (in the case of your termination of employment due to incapacity) and paragraphs 1(d), 2 and 3 of this Schedule A .

(d) If there should occur a Going Private Transaction on or before June 30, 2019, then:

(i) The number of Final Performance Shares shall be determined as the higher of ( x ) the 2015 Target Performance Award and ( y ) the number determined as follows:

(A) the number of Initial Performance Shares shall be determined as set forth in paragraph 1(a)(ii) above, except that the last day of the Performance Period shall be the tenth (10 ^th ) business day immediately preceding the date of such Going Private Transaction (the “ Measurement Date ”); and

(B) the number of Final Performance Shares shall be determined as set forth in paragraph 1(a)(iii) above, provided that if the Measurement Date of such Going Private Transaction occurs prior to the completion of any Performance Year(s), the Part B modifier applicable for such Performance Year(s) shall be deemed to be 1.0;

provided , however , that if such Going Private Transaction occurs after your death or termination due to incapacity, then, notwithstanding the foregoing provisions, the number of Final Performance Shares calculated pursuant to this paragraph 1(d)(i) shall be prorated based on the number of calendar days of the Performance Period which elapsed through the date of your death or termination due to incapacity.

(ii) The Final Performance Shares shall be granted as follows:

(A) If the Going Private Transaction is a permissible distribution event under Section 409A, then the Final Performance Shares shall be granted to you immediately prior to and contingent upon the consummation of the Going Private Transaction; or

(B) If the Going Private Transaction is not a permissible distribution event under Section 409A, then the Final Performance Shares

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shall be granted to you as soon as practicable following June 30, 2019, but in no event later than sixty (60) days following such date, subject to paragraphs 10(d)(iv) and/or 10(d)(v) of the Agreement, as applicable.

(iii) For avoidance of doubt, in the event a Going Private Transaction is consummated prior to June 30, 2019, but after your termination of employment in accordance with paragraph 9, 10(b), 10(c) or 11 of the Agreement, as applicable, then notwithstanding paragraphs 1(b) and 1(c) of this Schedule A , this paragraph 1(d) shall govern the determination of the number of Final Performance Shares and the date on which they are to be granted to you (or in the event of your death, to your estate or beneficiary).

(iv) If at any time Employer (or a successor to Employer, if applicable) is unable to deliver shares of Class B Common Stock when required hereunder, then in accordance with paragraph 2 of this Schedule A , you shall instead receive shares of stock, equity interests or other consideration having an equivalent “Fair Market Value” (as defined below) as the value of the shares of Class B Common Stock you would otherwise have received immediately prior to the Going Private Transaction if such Going Private Transaction constituted a permissible distribution event under Section 409A.


2.	Adjustments :

In the event of any dividend or other distribution (whether in the form of cash, shares, or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of shares or other securities of Employer, issuance of warrants or other rights to purchase shares or other securities of Employer, or other similar corporate transaction or event that constitutes an “equity restructuring transaction” as that term is defined in Accounting Standards Codification Topic 718 (or any successor thereto) or otherwise affects the shares of Class B Common Stock, then you and the Chair of the Compensation Committee on the Start Date (or his successor, if such director is also an Original Independent Director or a Qualified Replacement Director) shall mutually determine in good faith the appropriate adjustment to be made to the tables in Part A and Part B and/or to the number and kind of securities or other consideration deliverable as the 2015 Performance Award in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Schedule A .


3.	Registration :

Employer shall grant the shares of Class B Common Stock under the LTIP if it is able to do so under the terms of the plan and applicable law. If (a) Employer is a Publicly Traded Company at the time that the shares of Class B Common Stock are required to be granted to you as the 2015 Performance Award and (b) Employer is unable to grant such shares to you under the LTIP at such time ( e.g., following your death or termination due to incapacity, or if you elect not to continue your employment as an Advisor or a

A-4

Producer following expiration of the Employment Term), then Employer shall grant to you the shares of Class B Common Stock at the applicable time set forth in paragraph 1 above and, in addition, shall file a registration statement with regard to such shares with the Securities and Exchange Commission (the “ SEC ”) on Form S-3 (or such other form as Employer deems appropriate) no more than thirty (30) calendar days following the date of grant and shall use reasonable best efforts to cause the registration statement to become effective as soon as practicable; provided , however , that if Employer is not eligible for or is otherwise restricted from filing such registration statement with the SEC, then Employer shall use reasonable best efforts to effect the registration of such shares of Class B Common Stock granted to you as the 2015 Performance Award as soon as practicable; provided , further , however , that if, in the good faith reasonable judgment of the Chief Legal Officer of the Employer, the filing of such a registration statement would require the disclosure of material non-public information that Employer has a business purpose to keep confidential, then, upon notice to you, ( x ) if Employer qualifies as a “well-known seasoned issuer” (“ WKSI ”) under the Securities Act of 1933, as amended, at such time, the filing and effectiveness of the registration statement may be postponed for a period not to exceed ninety (90) days from the date of grant and ( y ) if the Employer is not a WKSI at such time, the filing of the registration statement may be postponed for a period not to exceed ninety (90) days from the date of grant and Employer shall use reasonable best efforts to cause the registration statement to become effective as soon as practicable thereafter. Any such postponement described above shall not exceed such number of days that the Chief Legal Officer of Employer determines in good faith to be reasonably necessary.


4.	Defined Terms :

“ Closing Price ” means the closing price of a share of Class B Common Stock, as published in the Wall Street Journal, for the applicable trading day.

“ Fair Market Value ” means, as of any date, the fair market value of a share of stock or other equity interest as determined by an independent appraiser selected in good faith by the Board (or the board of directors of a successor to Employer, if applicable).

“ Final Stock Price ” means the tenth (10 ^th ) highest Closing Price which occurs during the Performance Period (including a shortened Performance Period pursuant to paragraph 1(d)(i)(A) of this Schedule A ).

“ Initial Stock Price ” means the Closing Price on the first trading day in calendar year 2015.

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SCHEDULE B

2016 Performance Award

Part A : Number of Shares Earned Based on Stock Price Performance



Final Stock Price (% of Initial Stock Price)	# of Shares Earned*
Below 117.84%	0
117.84%	148,258
121.66%	186,681
125.57%	222,609
129.56%	256,194
133.64%	287,582
137.81%	316,907**
142.07%	344,298
146.43%	369,873
150.87%	393,689
155.41%	415,906
160.05%	436,622
Above 160.05%	436,622

* Number of shares earned between percentages shown in above table will be determined through straight-line interpolation.

** The target 2016 Performance Award (the “ 2016 Target Performance Award ”) shall be 316,907 shares of Class B Common Stock.

Part B : Modifier to Number of Shares Earned



PRSU Performance Goal Percentage Achievement	Modifier***
Below Threshold ( i.e. , <80%)	0.9
Threshold ( i.e. , 80%)	0.9
Target ( i.e. , 100%)	1.0
Maximum ( i.e. , 120%)	1.1
Above Maximum ( i.e. , >120%)	1.1

*** Modifier between levels determined through straight-line interpolation.

B-1


1.	Determination of the Number of Shares to be Granted :

(a) (i) On June 30, 2019, subject to your continued employment with Employer through such date (subject to paragraphs 1(b), 1(c), 1(d), 2 and 3 of this Schedule B ), the Compensation Committee will determine the number of shares of Class B Common Stock to be granted to you as the 2016 Performance Award based on the performance of the Class B Common Stock over the period beginning February 18, 2016 and ending June 30, 2019 (the “ Performance Period ”).

(iii) Once the Compensation Committee has determined the number of Initial Performance Shares, such number shall be divided into halves with one-half allocated to each of the 2017 and 2018 calendar years (each, a “ Performance Year ”). With respect to each such Performance Year, the number of Initial Performance Shares allocated to such year shall be adjusted based on the Company’s degree of achievement against the PRSU Performance Goal established for the Performance Year as reflected in the table in Part B above. For avoidance of doubt, the portion of the Initial Performance Shares allocated to any Performance Year shall be increased or decreased by no more than 10%. Following adjustment for the Company’s performance for each Performance Year, the aggregate performance-adjusted number of Initial Performance Shares (the “ Final Performance Shares ”) shall be granted to you as soon as practicable, but in no event later than sixty (60) days following June 30, 2019, subject to paragraph 10(d)(v) of the Agreement and paragraphs 1(b), 1(c), 1(d), 2 and 3 of this Schedule B .

(b) In the event your employment is terminated in accordance with paragraph 10(b) or 10(c) prior to June 30, 2019, you shall remain eligible to receive shares of Class B Common Stock as the 2016 Performance Award following the conclusion of the Performance Period, determined in accordance with paragraph 1(a) of this Schedule B . Shares of Class B Common Stock to be granted pursuant to this paragraph 1(b) shall be granted to you as soon as practicable following June 30, 2019, but in no event later than sixty (60) days following such date, subject to paragraphs 10(d)(iv) and 10(d)(v) of the Agreement, as applicable, and paragraphs 1(d), 2 and 3 of this Schedule B .

(c) In the event your employment terminates prior to June 30, 2019 due to your incapacity in accordance with paragraph 9 or your death in accordance with

B-2

paragraph 11, you shall remain eligible to receive shares of Class B Common Stock as the 2016 Performance Award following the conclusion of the Performance Period, determined in accordance with paragraph 1(a) of this Schedule B , and then prorated based on the number of calendar days of the Performance Period which have elapsed through the date of your death or termination due to incapacity. Shares of Class B Common Stock to be granted pursuant to this paragraph 1(c) shall be granted to you (or your estate or beneficiary, if applicable) as soon as practicable following June 30, 2019, but in no event later than sixty (60) days following such date, subject to paragraph 10(d)(v) of the Agreement (in the case of your termination of employment due to incapacity) and paragraphs 1(d), 2 and 3 of this Schedule B .

(d) If there should occur a Going Private Transaction on or before June 30, 2019, then:

(i) The number of Final Performance Shares shall be determined as the higher of ( x ) the 2016 Target Performance Award and ( y ) the number determined as follows:

(ii) The Final Performance Shares shall be granted as follows:

(B) If the Going Private Transaction is not a permissible distribution event under Section 409A, then the Final Performance Shares

B-3

(iii) For avoidance of doubt, in the event a Going Private Transaction is consummated prior to June 30, 2019, but after your termination of employment in accordance with paragraph 9, 10(b), 10(c) or 11 of the Agreement, as applicable, then notwithstanding paragraphs 1(b) and 1(c) of this Schedule B , this paragraph 1(d) shall govern the determination of the number of Final Performance Shares and the date on which they are to be granted to you (or in the event of your death, to your estate or beneficiary).

(iv) If at any time Employer (or a successor to Employer, if applicable) is unable to deliver shares of Class B Common Stock when required hereunder, then in accordance with paragraph 2 of this Schedule B , you shall instead receive shares of stock, equity interests or other consideration having an equivalent “Fair Market Value” (as defined below) as the value of the shares of Class B Common Stock you would otherwise have received immediately prior to the Going Private Transaction if such Going Private Transaction constituted a permissible distribution event under Section 409A.


2.	Adjustments :

In the event of any dividend or other distribution (whether in the form of cash, shares, or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of shares or other securities of Employer, issuance of warrants or other rights to purchase shares or other securities of Employer, or other similar corporate transaction or event that constitutes an “equity restructuring transaction” as that term is defined in Accounting Standards Codification Topic 718 (or any successor thereto) or otherwise affects the shares of Class B Common Stock, then you and the Chair of the Compensation Committee on the Start Date (or his successor, if such director is also an Original Independent Director or a Qualified Replacement Director) shall mutually determine in good faith the appropriate adjustment to be made to the tables in Part A and Part B and/or to the number and kind of securities or other consideration deliverable as the 2016 Performance Award in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Schedule B .


3.	Registration :

Employer shall grant the shares of Class B Common Stock under the LTIP if it is able to do so under the terms of the plan and applicable law. If (a) Employer is a Publicly Traded Company at the time that the shares of Class B Common Stock are required to be granted to you as the 2016 Performance Award and (b) Employer is unable to grant such shares to you under the LTIP at such time ( e.g., following your death or termination due to incapacity, or if you elect not to continue your employment as an Advisor or a

B-4

Producer following expiration of the Employment Term), then Employer shall grant to you the shares of Class B Common Stock at the applicable time set forth in paragraph 1 above and, in addition, shall file a registration statement with regard to such shares with the Securities and Exchange Commission (the “ SEC ”) on Form S-3 (or such other form as Employer deems appropriate) no more than thirty (30) calendar days following the date of grant and shall use reasonable best efforts to cause the registration statement to become effective as soon as practicable; provided , however , that if Employer is not eligible for or is otherwise restricted from filing such registration statement with the SEC, then Employer shall use reasonable best efforts to effect the registration of such shares of Class B Common Stock granted to you as the 2016 Performance Award as soon as practicable; provided , further , however , that if, in the good faith reasonable judgment of the Chief Legal Officer of the Employer, the filing of such a registration statement would require the disclosure of material non-public information that Employer has a business purpose to keep confidential, then, upon notice to you, ( x ) if Employer qualifies as a “well-known seasoned issuer” (“ WKSI ”) under the Securities Act of 1933, as amended, at such time, the filing and effectiveness of the registration statement may be postponed for a period not to exceed ninety (90) days from the date of grant and ( y ) if the Employer is not a WKSI at such time, the filing of the registration statement may be postponed for a period not to exceed ninety (90) days from the date of grant and Employer shall use reasonable best efforts to cause the registration statement to become effective as soon as practicable thereafter. Any such postponement described above shall not exceed such number of days that the Chief Legal Officer of Employer determines in good faith to be reasonably necessary.


4.	Defined Terms :

“ Closing Price ” means the closing price of a share of Class B Common Stock, as published in the Wall Street Journal, for the applicable trading day.

“ Initial Stock Price ” means the Closing Price on February 18, 2016.

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SCHEDULE C

2017 Performance Award

Part A : Number of Shares Earned Based on Stock Price Performance



Final Stock Price (% of Initial Stock Price)	# of Shares Earned*
< 122.24%	0
122.24%	212,487
127.10%	254,321
132.11%	292.719
137.26%	328,000
142.57%	360,324
148.03%	389,906**
153.65%	433,268
159.43%	473,050
165.37%	509,599
171.47%	543,058
177.75%	573,697
> 177.75%	573,697

* Number of shares earned between percentages shown in above table will be determined through straight-line interpolation.

** The target 2017 Performance Award (the “ 2017 Target Performance Award ”) shall be 389,906 shares of Class B Common Stock.

Part B : Modifier to Number of Shares Earned



PRSU Performance Goal Percentage Achievement	Modifier***
Below Threshold ( i.e. , <80%)	0.9
Threshold ( i.e. , 80%)	0.9
Target ( i.e. , 100%)	1.0
Maximum ( i.e. , 120%)	1.1
Above Maximum ( i.e. , >120%)	1.1

*** Modifier between levels determined through straight-line interpolation.

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1.	Determination of the Number of Shares to be Granted :

(a) (i) On June 30, 2021, subject to your continued employment with Employer through such date (subject to paragraphs 1(b), 1(c), 1(d), 2 and 3 of this Schedule C ), the Compensation Committee will determine the number of shares of Class B Common Stock to be granted to you as the 2017 Performance Award based on the performance of the Class B Common Stock over the period beginning on the date this Agreement is executed by both parties hereto and ending June 30, 2021 (the “ Performance Period ”).

(iii) Once the Compensation Committee has determined the number of Initial Performance Shares, such number shall be divided into halves with one-half allocated to each of the 2019 and 2020 calendar years (each, a “ Performance Year ”). With respect to each such Performance Year, the number of Initial Performance Shares allocated to such year shall be adjusted based on the Company’s degree of achievement against the PRSU Performance Goal established for the Performance Year as reflected in the table in Part B above. For avoidance of doubt, the portion of the Initial Performance Shares allocated to any Performance Year shall be increased or decreased by no more than 10%. Following adjustment for the Company’s performance for each Performance Year, the aggregate performance-adjusted number of Initial Performance Shares (the “ Final Performance Shares ”) shall be granted to you as soon as practicable, but in no event later than sixty (60) days following June 30, 2021, subject to paragraph 10(d)(v) of the Agreement and paragraphs 1(b), 1(c), 1(d), 2 and 3 of this Schedule C .

(b) In the event your employment is terminated in accordance with paragraph 10(b) or 10(c) prior to June 30, 2021, you shall remain eligible to receive shares of Class B Common Stock as the 2017 Performance Award following the conclusion of the Performance Period, determined in accordance with paragraph 1(a) of this Schedule C . Shares of Class B Common Stock to be granted pursuant to this paragraph 1(b) shall be granted to you as soon as practicable following June 30, 2021, but in no event later than sixty (60) days following such date, subject to paragraphs 10(d)(iv) and 10(d)(v) of the Agreement, as applicable, and paragraphs 1(d), 2 and 3 of this Schedule C .

C-2

(c) In the event your employment terminates prior to June 30, 2021 due to your incapacity in accordance with paragraph 9 or your death in accordance with paragraph 11, you shall remain eligible to receive shares of Class B Common Stock as the 2017 Performance Award following the conclusion of the Performance Period, determined in accordance with paragraph 1(a) of this Schedule C , and then prorated based on the number of calendar days of the Performance Period which have elapsed through the date of your death or termination due to incapacity. Shares of Class B Common Stock to be granted pursuant to this paragraph 1(c) shall be granted to you (or your estate or beneficiary, if applicable) as soon as practicable following June 30, 2021, but in no event later than sixty (60) days following such date, subject to paragraph 10(d)(v) of the Agreement (in the case of your termination of employment due to incapacity) and paragraphs 1(d), 2 and 3 of this Schedule C .

(d) If there should occur a Going Private Transaction on or before June 30, 2021, then:

(i) The number of Final Performance Shares shall be determined as the higher of ( x ) the 2017 Target Performance Award and ( y ) the number determined as follows:

(ii) The Final Performance Shares shall be granted as follows:

C-3

(B) If the Going Private Transaction is not a permissible distribution event under Section 409A, then the Final Performance Shares shall be granted to you as soon as practicable following June 30, 2021, but in no event later than sixty (60) days following such date, subject to paragraphs 10(d)(iv) and/or 10(d)(v) of the Agreement, as applicable.

(iii) For avoidance of doubt, in the event a Going Private Transaction is consummated prior to June 30, 2021, but after your termination of employment in accordance with paragraph 9, 10(b), 10(c) or 11 of the Agreement, as applicable, then notwithstanding paragraphs 1(b) and 1(c) of this Schedule C , this paragraph 1(d) shall govern the determination of the number of Final Performance Shares and the date on which they are to be granted to you (or in the event of your death, to your estate or beneficiary).

(iv) If at any time Employer (or a successor to Employer, if applicable) is unable to deliver shares of Class B Common Stock when required hereunder, then in accordance with paragraph 2 of this Schedule C , you shall instead receive shares of stock, equity interests or other consideration having an equivalent “Fair Market Value” (as defined below) as the value of the shares of Class B Common Stock you would otherwise have received immediately prior to the Going Private Transaction if such Going Private Transaction constituted a permissible distribution event under Section 409A.


2.	Adjustments :

In the event of any dividend or other distribution (whether in the form of cash, shares, or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of shares or other securities of Employer, issuance of warrants or other rights to purchase shares or other securities of Employer, or other similar corporate transaction or event that constitutes an “equity restructuring transaction” as that term is defined in Accounting Standards Codification Topic 718 (or any successor thereto) or otherwise affects the shares of Class B Common Stock, then you and the Chair of the Compensation Committee on the Start Date (or his successor, if such director is also an Original Independent Director or a Qualified Replacement Director) shall mutually determine in good faith the appropriate adjustment to be made to the tables in Part A and Part B and/or to the number and kind of securities or other consideration deliverable as the 2017 Performance Award in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Schedule C .


3.	Registration :

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shares to you under the LTIP at such time ( e.g., following your death or termination due to incapacity, or if you elect not to continue your employment as an Advisor or a Producer following expiration of the Employment Term), then Employer shall grant to you the shares of Class B Common Stock at the applicable time set forth in paragraph 1 above and, in addition, shall file a registration statement with regard to such shares with the Securities and Exchange Commission (the “ SEC ”) on Form S-3 (or such other form as Employer deems appropriate) no more than thirty (30) calendar days following the date of grant and shall use reasonable best efforts to cause the registration statement to become effective as soon as practicable; provided , however , that if Employer is not eligible for or is otherwise restricted from filing such registration statement with the SEC, then Employer shall use reasonable best efforts to effect the registration of such shares of Class B Common Stock granted to you as the 2017 Performance Award as soon as practicable; provided , further , however , that if, in the good faith reasonable judgment of the Chief Legal Officer of the Employer, the filing of such a registration statement would require the disclosure of material non-public information that Employer has a business purpose to keep confidential, then, upon notice to you, ( x ) if Employer qualifies as a “well-known seasoned issuer” (“ WKSI ”) under the Securities Act of 1933, as amended, at such time, the filing and effectiveness of the registration statement may be postponed for a period not to exceed ninety (90) days from the date of grant and ( y ) if the Employer is not a WKSI at such time, the filing of the registration statement may be postponed for a period not to exceed ninety (90) days from the date of grant and Employer shall use reasonable best efforts to cause the registration statement to become effective as soon as practicable thereafter. Any such postponement described above shall not exceed such number of days that the Chief Legal Officer of Employer determines in good faith to be reasonably necessary.


4.	Defined Terms :

“ Closing Price ” means the closing price of a share of Class B Common Stock, as published in the Wall Street Journal, for the applicable trading day.

“ Initial Stock Price ” means the greater of ( x ) the average Closing Price of the ten (10) trading days immediately preceding the date on which this Agreement is executed by both parties hereto and ( y ) the Closing Price on the date on which the Compensation Committee approves the terms of this Agreement (or if such day is not a trading day, the Closing Price on the preceding trading day).

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SCHEDULE D

Cash Performance Award

You shall be eligible to receive an additional cash payment (the “ Cash Performance Award ”) if you are continuously employed with the Company through June 30, 2021 (or your employment terminates under any of the circumstances described below), and during the periods specified herein, the Company achieves at least the lowest level of cumulative adjusted operating income (“ COI ”) set forth in the table below (or as the same may be adjusted in accordance with the terms hereof). Any amount of the Cash Performance Award that you earn (the “ Earned Award ”) shall be paid to you in cash, less applicable deductions and withholdings, as soon as practicable, but in no event later than ninety (90) days following June 30, 2021, subject to paragraph 10(d)(v) of the Agreement and paragraphs 4, 5, 6, and 7 of this Schedule D .

The terms of the Cash Performance Award are as follows:

1. “ COI ” equals the aggregate adjusted operating income as reported in the Company’s financial statements for each of the Company’s last thirteen (13) fiscal quarters ending with June 30, 2021, which 4.25-year period is the “ Performance Period ;” provided , however , that, if Employer’s accounting policies or practices change for any reason such that the manner in which aggregate adjusted operating income is determined for any period subsequent to the first quarter of fiscal year 2017 differs from that applicable in respect of fiscal year 2016 then, for purposes of this Agreement, COI shall be adjusted such that such measure is determined with respect to all relevant periods in the same manner as applied in respect of fiscal year 2016.

2. The Earned Award shall be determined based on the following performance schedule:



	COI ($ millions)	Cash Payout ($ millions)
Threshold	$12,945	$20
	$13,240	$25
Target	$13,700	$33
	$14,291	$50
Maximum	$14,493	$55

The numbers in the row marked “COI ($ millions)” shall be referred to herein as the “ COI Targets .”

3. The Earned Award shall be $0 for COI below Threshold level, and the Earned Award shall be $55 million for COI at or above the Maximum level. The Earned Award

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with respect to COI at levels between the amounts stated in the above table shall be determined by linear interpolation.

4. In the event your employment is terminated in accordance with paragraph 10(b) or 10(c) prior to June 30, 2021, you shall remain eligible to receive the Cash Performance Award following the conclusion of the Performance Period, determined in accordance with paragraphs 2 and 3 of this Schedule D . The Earned Amount shall be paid to you as soon as practicable following June 30, 2021, but in no event later than ninety (90) days following such date, subject to paragraphs 10(d)(iv) and 10(d)(v) of the Agreement, as applicable, and paragraphs 6 and 7 of this Schedule D .

5. In the event your employment terminates prior to June 30, 2021 due to your incapacity in accordance with paragraph 9 or your death in accordance with paragraph 11, you shall remain eligible to receive the Cash Performance Award following the conclusion of the Performance Period, determined in accordance with paragraphs 2 and 3 of this Schedule D , and then prorated based on the number of calendar days of the Performance Period which have elapsed through the date of your death or termination due to incapacity. The prorated Earned Amount shall be paid to you as soon as practicable following June 30, 2021, but in no event later than ninety (90) days following such date, subject to paragraph 10(d)(v) of the Agreement, as applicable, and paragraphs 6 and 7 of this Schedule D .

6. If there should occur a Going Private Transaction on or before June 30, 2021, then:

(i) The Earned Amount shall be determined as the higher of ( x ) the cash payout shown in the table above for Target level performance and ( y ) the Earned Amount determined as set forth in paragraphs 2 and 3 of this Schedule D , except that the last day of the Performance Period shall be the last day of the fiscal quarter immediately preceding the date of such Going Private Transaction (the “ Measurement Date ”).

(ii) If such Going Private Transaction occurs after your death or termination due to incapacity, then, notwithstanding the foregoing paragraph 6(i), the Earned Amount calculated pursuant to paragraph 6(i) shall be prorated based on the number of calendar days of the Performance Period which elapsed through the date of your death or termination due to incapacity.

(iii) The Earned Amount shall be paid as follows:

(A) If the Going Private Transaction is a permissible distribution event under Section 409A, then the Earned Amount shall be paid to you immediately prior to and contingent upon the consummation of the Going Private Transaction; or

(B) If the Going Private Transaction is not a permissible distribution event under Section 409A, then the Earned Amount shall be

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paid to you as soon as practicable following June 30, 2021, but in no event later than ninety (90) days following such date, subject to paragraphs 10(d)(iv) and/or 10(d)(v) of the Agreement, as applicable.

(iv) For avoidance of doubt, in the event a Going Private Transaction is consummated prior to June 30, 2021, but after your termination of employment in accordance with paragraph 9, 10(b), 10(c) or 11 of the Agreement, as applicable, then notwithstanding paragraphs 4 and 5 of this Schedule D , this paragraph 6 shall govern the determination of the Earned Amount and the date on which it is payable to you (or in the event of your death, to your estate or beneficiary).

7. Adjustments :

In the event of any dividend or other distribution (whether in the form of cash, shares, or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of shares or other securities of Employer, issuance of warrants or other rights to purchase shares or other securities of Employer, or other similar corporate transaction or event that constitutes an “equity restructuring transaction” as that term is defined in Accounting Standards Codification Topic 718 (or any successor thereto) or otherwise affects the shares of Class B Common Stock, then you and the Chair of the Compensation Committee on the Start Date (or his successor, if such director is also an Original Independent Director or a Qualified Replacement Director) shall mutually determine in good faith the appropriate adjustment to be made to the calculation of the Earned Amount in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Schedule D .

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SCHEDULE E

Form of Release

GENERAL RELEASE

WHEREAS, Leslie Moonves (hereinafter referred to as the “ Executive ”) and CBS Corporation (hereinafter referred to as “ Employer ”) are parties to an Employment Agreement, dated May 19, 2017 (the “ Employment Agreement ”), which provided for the Executive’s employment with Employer on the terms and conditions specified therein; and

WHEREAS, pursuant to paragraph [10(d)] [12] of the Employment Agreement, the Executive has agreed to execute a release of the type and nature set forth herein as a condition to his entitlement to certain payments and benefits upon his termination of employment with Employer; and

NOW, THEREFORE, in consideration of the premises and mutual promises herein contained and for other good and valuable consideration received or to be received by the Executive in accordance with the terms of the Employment Agreement, it is agreed as follows:

1. (a) Excluding enforcement of the covenants, promises and/or rights reserved herein, the Executive hereby irrevocably and unconditionally releases, acquits and forever discharges Employer and each of Employer’s owners, stockholders, predecessors, successors, assigns, directors, officers, employees, divisions, subsidiaries, affiliates (and directors, officers and employees of such companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them (collectively “ Releasees ”), or any of them, from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, rights arising out of alleged violations of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, or any tort or any legal restrictions on Employer’s right to terminate employees, or any Federal, state or other governmental statute, regulation or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Federal Age Discrimination In Employment Act of 1967 (“ADEA”), as amended, the Employee Retirement Income Security Act (“ERISA”), as amended, the Civil Rights Act of 1991, as amended, the Rehabilitation Act of 1973, as amended, the Older Workers Benefit Protection Act (“OWBPA”), as amended, the Worker Adjustment Retraining and Notification Act (“WARN”), as amended, the Fair Labor Standards Act (“FLSA”), as amended, the Occupational Safety and Health Act of 1970 (“OSHA”), the New York State Human Rights Law, as amended, the New York Labor Act, as amended, the New York Equal Pay Law, as amended, the New York Civil Rights Law, as amended, the New York Rights of Persons With Disabilities Law, as amended, and the New York

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Equal Rights Law, as amended, that the Executive now has, or has ever had, or ever shall have, against each or any of the Releasees, by reason of any and all acts, omissions, events, circumstances or facts existing or occurring up through the date of the Executive’s execution hereof that directly or indirectly arise out of, relate to, or are connected with, the Executive’s services to, or employment by Employer (any of the foregoing being a “ Claim ” or, collectively, the “ Claims ”); provided , however , that this release shall not apply to any of the obligations of Employer or any other Releasee under the Employment Agreement, or under any agreements, plans, contracts, documents or programs described or referenced in the Employment Agreement; and provided , further , that this release shall not apply to any rights the Executive may have to obtain contribution or indemnity against Employer or any other Releasee pursuant to contract, Employer’s certificate of incorporation and by-laws or otherwise preclude you from exercising any legally protected whistleblower rights (including under Rule 21F under the Exchange Act) or rights concerning the defense of trade secrets.

(b) Excluding enforcement of the covenants, promises and/or rights reserved herein, the Employer hereby irrevocably and unconditionally releases, acquits and forever discharges Executive from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, that the Employer now has, or has ever had, or ever shall have, against Executive, by reason of any and all acts, omissions, events, circumstances or facts existing or occurring through the date of Employer execution of this release that directly or indirectly arise out of, relate to, or are connected with, the Executive’s services to, or employment by Employer; provided , however , that this release shall not apply to any of the continuing obligations of Executive under the Employment Agreement, or under any agreements, plans, contracts, documents or programs described or referenced in the Employment Agreement; and provided , further , that this release shall not apply to any rights Employer may have to obtain contribution or indemnity against Executive pursuant to contract or otherwise.

2. The Executive expressly waives and relinquishes all rights and benefits afforded by California Civil Code Section 1542 and does so understanding and acknowledging the significance of such specific waiver of Section 1542. Section 1542 states as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

Thus, notwithstanding the provisions of Section 1542, and for the purpose of implementing a full and complete release and discharge of the Releasees, the Executive expressly acknowledges that this Agreement is intended to include in its effect, without limitation, all Claims that the Executive does not know or suspect to exist in the

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Executive’s favor at the time of execution hereof, and that this Agreement contemplates the extinguishment of any such Claim or Claims.

3. The Executive understands that he has been given a period of twenty-one (21) days to review and consider this General Release before signing it pursuant to the Age Discrimination In Employment Act of 1967, as amended. The Executive further understands that he may use as much of this 21–day period as the Executive wishes prior to signing.

4. The Executive acknowledges and represents that he understands that he may revoke the release set forth in paragraph 1, including, the waiver of his rights under the Age Discrimination in Employment Act of 1967, as amended, effectuated in this Agreement within seven (7) days of signing this Agreement. Revocation can be made by delivering a written notice of revocation to Senior Executive Vice President, Chief Legal Officer, CBS Corporation, 51 West 52 ^nd Street, New York, New York 10019. For this revocation to be effective, written notice must be received by the Chief Legal Officer no later than the close of business on the seventh day after the Executive signs this Agreement. If the Executive revokes the release set forth in paragraph 1, Employer shall have no obligations to the Executive under paragraph [10(d)] [12] of the Employment Agreement.

5. The Executive and Employer respectively represent and acknowledge that in executing this Agreement neither of them is relying upon, and has not relied upon, any representation or statement not set forth herein made by any of the agents, representatives or attorneys of the Releasees with regard to the subject matter, basis or effect of this Agreement or otherwise.

6. This Agreement shall not in any way be construed as an admission by any of the Releasees that any Releasee has acted wrongfully or that the Executive has any rights whatsoever against any of the Releasees except as specifically set forth herein, and each of the Releasees specifically disclaims any liability to any party for any wrongful acts.

7. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under law. Should there be any conflict between any provision hereof and any present or future law, such law shall prevail, but the provisions affected thereby shall be curtailed and limited only to the extent necessary to bring them within the requirements of law, and the remaining provisions of this Agreement shall remain in full force and effect and be fully valid and enforceable.

8. The Executive represents and agrees (a) that the Executive has to the extent he desires discussed all aspects of this Agreement with his attorney, (b) that the Executive has carefully read and fully understands all of the provisions of this Agreement, and (c) that the Executive is voluntarily entering into this Agreement.

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9. This General Release shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflicts of laws principles thereof or to those of any other jurisdiction which, in either case, could cause the application of the laws of any jurisdiction other than the State of New York. This General Release is binding on the successors and assigns of, and sets forth the entire agreement between, the parties hereto; fully supersedes any and all prior agreements or understandings between the parties hereto pertaining to the subject matter hereof; and may not be changed except by explicit written agreement to that effect subscribed by the parties hereto.

PLEASE READ CAREFULLY. THIS GENERAL RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

This General Release is executed by the Executive and Employer as

of the _______ day of __________ , 20___.




	Leslie Moonves



	CBS CORPORATION


	By:


	Title:

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Exhibit 12

CBS CORPORATION AND SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(Tabular dollars in millions, except ratios)



	Six Months Ended						Twelve Months Ended
	June 30,						December 31,
	2017			2016			2016			2015			2014			2013			2012
Earnings from continuing operations before income taxes and equity in loss of investee companies	$	1,187		$	1,224		$	2,230		$	2,264		$	1,858		$	2,303		$	1,994
Add:
Distributions from investee companies	—			4			3			3			9			8			11
Interest expense, net of capitalized interest	220			200			411			392			363			375			401
1/3 of rental expense	28			27			56			58			57			55			55
Total earnings from continuing operations	$	1,435		$	1,455		$	2,700		$	2,717		$	2,287		$	2,741		$	2,461

Fixed charges:
Interest expense, net of capitalized interest	$	220		$	200		$	411		$	392		$	363		$	375		$	401
1/3 of rental expense	28			27			56			58			57			55			55
Total fixed charges	$	248		$	227		$	467		$	450		$	420		$	430		$	456
Ratio of earnings to fixed charges	5.8		x	6.4		x	5.8		x	6.0		x	5.4		x	6.4		x	5.4		x

Exhibit 31(a)

CERTIFICATION

I, Leslie Moonves, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of CBS Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2017



	/s/ Leslie Moonves
	Leslie Moonves
	Chairman of the Board, President and Chief Executive Officer

Exhibit 31(b)

CERTIFICATION

I, Joseph R. Ianniello, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of CBS Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2017



	/s/ Joseph R. Ianniello
	Joseph R. Ianniello
	Chief Operating Officer

Exhibit 32(a)

Certification Pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of CBS Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Leslie Moonves, Chairman of the Board, President and Chief Executive Officer of the Company, certify that to my knowledge:

1. the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Leslie Moonves
Leslie Moonves
August 7, 2017

Exhibit 32(b)

Certification Pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of CBS Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission (the ”Report”), I, Joseph R. Ianniello, Chief Operating Officer of the Company, certify that to my knowledge:

1. the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Joseph R. Ianniello
Joseph R. Ianniello
August 7, 2017