CBS Continues To Be The Most Watched Network; Will Benefit From Growth In Ad Spending


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CBS Corporation's ( CBS ) CBS television network was once again rated the most watched network with total average weekly viewership of 9.82 million for the month of November. The Big Bang Theory ranked as the top broadcast entertainment series among adults 18-49, while NCIS was the overall most-watched series. The network is also benefiting from the new comedies Mom, The Millers and The Crazy Ones .

Recently in the third quarter, CBS posted a solid set of results, largely driven by the successful summer programming schedule on the CBS Television Network, which included an expanded schedule for Big Brother , new episodes of Unforgettable , and the debut of Under the Dome . Strong ratings should continue to boost the company's overall growth. We continue to believe that CBS will do well in the near term given the solid demand for its content and the company's continued focus on original programming.

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For content owners such as CBS, higher ratings translate into better advertising revenues. According to a new report from Kantar Media, excluding the Olympics, network TV expenditures in the third quarter fell 18% compared to a year ago, primarily due to the reduction in political category spending. However, other television segments witnessed healthy gains.  Total advertising expenditures in the third quarter of 2013 declined 2% from a year ago to $34 billion. For the first three quarters, total spending increased 0.7% to $102.5 billion. However, removing the Olympics and political ad spending in the Q3 last year, ad spending was up close to 3%. This is a better indicator of the trend in the advertisement spending.

According to research by PwC, the TV advertising sector will pass the $200 billion revenue mark in 2017, compared with $162 billion in 2012, for a compounded annual growth rate of nearly 10%. The spend on TV has been far more than on online ads and all other traditional media. While most of the traditional media markets are growing slowly or declining, television is poised to see healthy growth through 2017.

CBS is also benefiting from the rise in advertisement spending and witnessed 4% advertising gains in the third quarter this year. We expect the network's ratings to continue to grow as the network has been focusing on original programming and new content, which is helping it achieve higher viewership. Rising advertisement spending will aid to the company's overall revenue growth in the near term.

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This article appears in: Investing , Investing Ideas , Stocks , US Markets
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