Updated Research Report on CBS Corp. - Analyst Blog

On May 30, 2014, we issued an updated research report on CBS Corporation CBS following the company's first quarter fiscal 2014 results.

CBS Corp's quarterly earnings per share of 78 cents grew 7% year over year and was ahead of the Zacks Consensus Estimate. However, the shift of Super Bowl broadcast to Twenty-First Century Fox, Inc. FOXA marred its quarterly revenues of $3,856.0 million, which fell short of the Zacks Consensus Estimate and declined 4.6% year over year.

CBS Corp. hinted at a robust fiscal 2014. The company expects a good run in advertising in the second half of the year as political spending increases. Additionally, the telecast of Thursday Night National Football League (NFL) for 8 weeks will add to its advertising revenues. Moreover, the company's growth momentum will get a boost from the increasing reverse compensation from affiliates, strong demand of its content, digital distribution, more syndication deals and retransmission consent revenues.

The company anticipates CBS Television Network to be a major growth driver. CBS Corp. expects retransmission fees to hit the $2 billion mark in 2020.

CBS Corp. continues to benefit from its content monetization as well as streaming deals. After successfully licensing Blue Bloods and Hawaii Five-0, the company expects to put more of its programming on these platforms in 2014, which will boost its studio bottom-line results. Apart from this, the company has announced that it will return $6 billion to its shareholders in fiscal 2014.

However, CBS Corp. faces rise in programming costs in the second half due to a new agreement with the NFL along with the addition of the Thursday night NFL. Also, unfavorable currency fluctuations and competition from other stalwarts like Time Warner Inc. TWX pose concerns.

CBS Corp. currently carries a Zacks Rank #3 (Hold).

Key Picks from the Sector

A better-ranked media stock worth investment is The Walt Disney Company DIS, which carries a Zacks Rank #2 (Buy).





 

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