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$8.10 -2.04 (-20.12%)
10/10/2008 4:07 PM

CBS Corp (CBS)

CAPS Rating:
**

A mass media company with operations in the following segments: Television, Radio, Outdoor and Publishing.

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Avatar NetscribeMedia (20.24) Submitted: 1/09/07 7:31 AM : Outperform Start Price: $29.07 CBS Score: -34.76

CBS Corp is a mass media company that operates in four segments namely Television, Radio, Outdoor and Parks/Publishing. The television segment contributed around 66% of revenues in the first nine months of 2006 while radio and outdoor contributed around 15% each. CBS Corp was formed at the end of 2005 when Viacom was separated into CBS Corp and Viacom.

In their Television segment, CBS has been performing well, coming no. 1 in November and both revenues and OIBDA (Operating income before depreciation and amortization) for the 9 months of 2006 showing increases. The CBS Network had the number one sitcom, Two and a half Men, the number one news magazine, 60 Minutes, and the number one new drama, Shark, in the 2005 to 2006 season. But their radio revenues have declined due to the weak radio advertising market. The company has sold off a number of its stations in different markets in 2006 which might indicate that they are wide awake to the slow decline of terrestrial radio due to the emergence of satellite radio, Ipod and Mp3 players. They are also broadening their radio operations into new media through podcasting and streaming of feeds. They offer many of their shows on Google Video, Apple iTunes, Amazon.com, AOL and on Innertube, their own entertainment website.

Outdoor revenues are expected to go up in 2007 with the New York City subway deal and the London Underground and the Victoria Coach Station contract. The acquisition of the Strowers billboard businesses in France will also foster growth in this segment.

CBS seems to be intent on diversifying into new areas as it has announced plans to launch CBS Records, which will market its music and videos through CBS’s televison and media platforms. They are also planning a stock buyback to the tune of $1.5 billion in early 2007. In a survey conducted by CBS, it was revealed that consumers who adopt new media like digital TV are the most ardent viewers of the top networks. With the digital TV deadline set for 2009, more customers are expected to subscribe to broadband and digital television, which suggests that CBS Corp will have a rewarding year ahead.


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Avatar NetscribeMedia (20.24) Submitted: 4/23/07 2:43 AM

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CBS started the month of April with some controversy. Don Imus, a radio show host sparked a national outrage over alleged racist remarks on a drive time show. The controversy is however, not expected to affect CBS which is fortifying its presence on television as well as the internet. CBS has signed new deals with AOL, Microsoft, CNET Networks, Comcast, Joost, Bebo, Brightcove, Netvibes, Sling Media and Veoh. The partnership, named CBS Interactive Audience Network will help CBS consolidate its position as one of the most widely distributed content providers on the internet.

CBS has formed a new unit called CBS Mobile that will help them supply content to mobile phones. Industry experts believe that the mobile platform holds greater promise for the future than the internet. CBS’s television business is doing great. CBS is number one in the current season for households and adults - 18 to 49 and 25 to 54. Currently, CBS has nine of the top 20 shows. Simon and Schuster, the publishing company finished 2006 with 111 New York Times Bestsellers. This is a record in the company’s history.

CBS raised the quarterly dividend by 10% from 20 to 22 cents, in February. This is the company’s fourth dividend raise in the last 14 months. A $1.5 billion share repurchase program was also announced in the same month.

The 2006 revenues increased 1.5% year-over-year to $14.3 billion. CBS expects low single digit revenue growth in 2007. The earnings per share are, however, expected to grow in high single digits. CBS divested Paramount Parks and 39 radio stations in slower growth markets in 2006. Another 7 television stations were sold off for $185 million in February 2007. The divestitures are part of its strategy to reshape the business with higher margin assets.

The 2008 presidential elections could be a major revenue driver for CBS. A portion of these revenues might actually come in 2007 itself. Consequently, we expect CBS to outperform the market in the next one year.

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