We have maintained our long-term Neutral recommendation on
) with a target price of $51.00.
Why the Reiteration?
CBS Corporation's sustained focus on increasing subscription
based revenue channels remains a long-term growth driver. We
expect the company's growth momentum to continue in 2013 based on
reverse compensation from affiliates, strong demand of its
content, digital distribution, syndication sales and
This Zacks Rank #2 (Buy) stock continues to benefit from its
streaming deals as evident from the strong double-digit growth in
streaming revenues during first-quarter 2013. It has entered into
long-term streaming deals for CW content with Netflix and Hulu,
which will boost its operating results.
Moreover, the company entered into a deal with
) that extends the latter's archive of television shows and films
currently available on its streaming video site, Amazon Prime
Instant Video. These measures facilitate CBS in capitalizing on
Moreover, the company's 14-year contract with Turner
Broadcasting to divide rights fees for the NCAA tournament was
part of its effort to reduce costs and generate profits. The
company also extended its broadcast rights deal with the National
Football League (NFL) till 2022, which was scheduled to end in
2013. We believe that the company's long-term agreements will
generate a positive cash flow in the long run.
However, CBS remains extremely vulnerable to the advertising
market and operates in a highly competitive industry. Moreover,
secular headwinds remain a matter of concern for broadcast-driven
media companies. Consequently, we maintain our Neutral
recommendation on the stock.
Other Stocks to Consider
Besides CBS, the other stock worth considering in the
broadcasting and television industry includes
Fisher Communications, Inc.
), which holds a Zacks Rank #1 (Strong Buy).
Entravision Communications Corporation
) carrying a Zacks Rank #2 (Buy) is also worth considering.
AMAZON.COM INC (AMZN): Free Stock Analysis
CBS CORP (CBS): Free Stock Analysis Report
ENTRAVISION COM (EVC): Free Stock Analysis
FISHER COMM INC (FSCI): Free Stock Analysis
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