Major advertisers are still stick with TV despite fears that ad
dollars are rushing to the web. This bodes well for companies like
) as well as its rivals like Disney (
), News Corp. (
), Time Warner (
) and Viacom (
). Below we take a quick look at the findings and CBS's dependence
on TV advertising.
Our price estimate for CBS stands at $27.50
, implying a slight premium to the market price.
TV Advertisement Picking Up
According to a recent report in WSJ citing ad-buying firm
Intergroup, TV advertisement spending will increase by 3.3% in
2011. This is higher growth compared to overall expected growth in
advertising spend, which is likely to be about 1.6% in 2011
according to same firm. This implies that TV will gain market share
in total advertising market. The research firm expects this share
to be about 34% in 2011 and forecasts it to increase to 38% by
CBS Benefits, and Others
Media companies like CBS depend heavily on advertising revenue.
CBS, for instance, earns TV advertising dollars for its CBS network
and local TV stations. We estimate that value dependence of CBS on
TV ad dollars lies somewhere at 30% of the total. Therefore the
news that TV advertising is growing at a healthy pace holds bright
prospects for media companies like CBS, who depend heavily on this
revenue stream. You can modify the forecast below to see how
ad revenues from local TV stations
can benefit CBS.
See our complete analysis for CBS' stock