) is a diversified media company that primarily competes with other
media conglomerates like Disney (
), News Corp. (NASDAQ:NWS), Time Warner (NYSE:TWX) and Viacom
(NYSE:VIA). Below we take a quick look at the most critical drivers
of CBS' stock value.
Our price estimate for CBS stands at $27.49
, implying a premium to market price.
CBS-Owned TV Stations and CBS Radio - 28% of CBS' Stock
CBS-owned TV stations and CBS Radio together contribute about
28% to CBS' stock value, making this segment the top value driver
for the company by our estimates. The substantial value comes from
a combination of significant revenue and healthy margins.
CBS owns broadcasting TV stations through its CBS Television
Stations group which offers programming from CBS Network, CW
Network and MyNetworkTV. In addition to this, the company owns 130
radio stations. Although combined advertisement revenues
attributable to these TV stations and CBS radio amount to close to
20% of overall CBS revenues, higher valuation of this segment is
due to its higher EBITDA margins.
The EBITDA margins for this segment
stood at around 31% in 2010. These are much higher than that of CBS
Network revenues, for which margins were just around 12% for the
same period. Although cable networks have higher margins, their
revenue contribution is still much less compared to CBS-owned TV
stations and CBS radio.
See our complete analysis for CBS' stock here