CBS Corporation (CBS): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Driven by aggressive share repurchase and higher operating income, CBS Corp. posted better-than-expected first quarter fiscal 2014 earnings. However, the shift of the Super Bowl broadcast marred its quarterly revenues, which fell short of the Zacks Consensus Estimate and declined 4.6% year over year. Going ahead, CBS Corp. hinted at a stronger second half driven by increases in political spending, rising retransmission fees, and more syndication deals. But at the same time, the company expects programming costs to rise in the second half due to new agreement with the NFL along with the addition of a Thursday night NFL game. Given the pros and cons, we reiterate our Neutral recommendation on the stock.

Overview:

Based in New York, CBS Corporation (CBS) owns top media franchises. The company realigned its reporting structure with effect from fourth-quarter 2009. The company now reports under two broad groups Content Group and Local Group.

Content Group Comprises 74% of 2013 Total Revenue:

Entertainment Segment comprises CBS Television Network CBS Television Studios, CBS Studios International and CBS Television Distribution CBS Films, the producer and distributor of theatrical motion pictures and CBS Interactive, which operates one of the leading online content networks for information and entertainment and includes leading brands, such as CNET, CBS.com, CBSSports.com, GameSpot, TV.com, CBSNews.com, ZDNet, Last.fm, and MetroLyrics.com.

Cable Networks Segment comprises the premium subscription program services, Showtime Networks the cable network focused on college athletics and other sports CBS Sports Network and a venture between Showtime Networks and Smithsonian Institution, Smithsonian Networks.

Publishing Segment comprises Simon & Schuster, which publishes and distributes consumer books in printed, audio and digital formats (audio downloads and electronic books) both domestically and internationally under imprints such as Simon & Schuster, Pocket Books, Scribner and Free Press.

Local Group Comprises 26% of 2013 Total Revenue:

Local Broadcasting Segment comprises CBS Television Stations consisting of 30 owned and operated TV stations, and CBS Radio, consisting of 127 radio stations owned and operated in 28 U.S. markets as of Feb 14, 2013.

Outdoor Americas through CBS Outdoor in North America and South America, sells advertising space on different media, including billboards, transit shelters, buses, rail systems (in-car, station platforms and terminals), mall kiosks, and stadium signage and in retail stores.

CBS Corporation on Jan 16, 2013, announced its plan to convert its CBS Outdoor operations in North America and South America into a real estate investment trust ("REIT") and divest its Outdoor businesses in Europe and Asia, which will be reflected as a discontinued operation in the books as of Dec 31, 2012. The company launched an IPO in the first quarter of 2014 and also received favorable ruling from IRS to convert CBS Outdoors in to a REIT.

CBS Corp. was born out of Viacom when the latter split into two publicly traded companies New Viacom and CBS Corporation on Dec 31, 2005. Each outstanding share of Viacom's common stock was converted automatically into a right to receive half a share of New Viacom common stock and one CBS common share. New Viacom retained MTV Networks (MTV, VH1, Nickelodeon, Nick at Nite, Comedy Central, CMT: Country Music Television, Spike TV, TV Land and many other networks around the world), BET, Paramount Pictures, Paramount Home Entertainment, and Famous Music.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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