Market Overview

The Latest CBS Drama Series Is Playing Out On The Board, Not On TV

The Latest CBS Drama Series Is Playing Out On The Board, Not On TV

CBS Corporation (NYSE: CBS)'s move to file a lawsuit against its own parent company, National Amusements, has one of two outcomes -- both of which are a potential negative for the stock, according to KeyBanc.

The Analyst

KeyBanc Capital Markets' Andy Hargreaves maintains a Sector Weight rating on CBS.

The Thesis

CBS' lawsuit against National Amusements will either "entrench" CBS' management and the existing asset base or result in a high degree of management disruption, Hargreaves said in a research note. Both of these outcomes not only increases operational risk, but impacts its ability to generate outsized profit growth.

Even if CBS wins the lawsuit against its majority shareholder, it will gain a temporary restraining order that would allow the board of directors to issue incremental voting stocks to dilute National Amusements voting power from 80 percent to 17 percent, the analyst wrote. If CBS on the losing end, it will likely result in increased operational risk through a re-merger with Viacom, Inc. (NASDAQ: VIAB), which appears to be National Amusements' ultimate objective as it's also a major shareholder of the movie studio.

CBS says in its complaint it's being run by CEO Leslie Moonves and "one of the most accomplished and successful" executive teams in the media business. The company's stock, however, has "significantly underperformed" its peers from 2012 through 2017 and its "insistence on superiority" should be questioned.

The battle between CBS and its parent company "seems likely to focus their attentions on victory over each other in the near term" which doesn't bode well for CBS' operational performance.

Price Action

Shares of CBS were trading higher by 0.75 percent early Tuesday morning after closing at $53.65.

Related Links:

CBS Sues Controlling Shareholder National Amusements, Accuses Shari Redstone Of Undermining Board

TV Network Stocks May Have Uneventful Q1 Earnings Season

Latest Ratings for CBS

Nov 2019BenchmarkMaintainsBuy
Oct 2019CitiMaintainsBuy
Oct 2019Credit SuisseMaintainsOutperform

View More Analyst Ratings for CBS
View the Latest Analyst Ratings


Related Articles (CBS)

View Comments and Join the Discussion!

Posted-In: Andy HargreavesAnalyst Color News Legal Management Top Stories Analyst Ratings Media Best of Benzinga

Latest Ratings

DEMorgan StanleyMaintains335.0
SBNYRaymond JamesMaintains138.0
CORTHC Wainwright & Co.Maintains32.0
AHEXYMorgan StanleyDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at