Charlie Sheen's antics and Warner Brothers' decision to fire him
begs the question - how much of CBS' (
) value is at stake? CBS (
) competes with Disney (
), News Corp. (
), Time Warner (
) and Viacom (
Our price estimate for CBS' stock stands at
which is a premium of roughly 12% to the market price.
The actor of CBS' hit show
Two And A Half Men
has been on a media tirade since he was kicked off the show and
Warner Brothers decided to cancel the production of the sitcom that
airs on CBS. There have been several stories about how much money
is at stake, and when looked at in the context of CBS's overall
value and nature of broadcasting, is it really significant?
Below we present our quick take on this.
A Forbes columnist describe
Two and Half Men
The show is the most-watched comedy in prime time averaging
15.2 million viewers. It pulls $207,000 per ad. Last season, it
generated $155.1 million in CBS ad revenue according to Kantar
Media. Star Charlie Sheen earned $30 million last year on the back
of the show.
'Two and a Half Men' Canceled After Charlie Sheen's
, Forbes Blog, Feb 25 2011))
If we look at starting dates of each of the seasons of
Two and a Half Men,
it looks like CBS airs one season a year and so implies annual
revenues of more than $150 million. Put this into context of CBS
network (not whole of CBS) overall revenues, it seems like this
particular series accounts for a little over 4% of its
We estimate that CBS network constitutes close to 15% of CBS'
value. Although its revenue contribution is higher, its lesser
value contribution results from lower margins of this division.
Even if we assumed that
Two and a Half Men
would have continued into perpetuity (which seems highly unlikely),
we estimate that this would account for less 1% of CBS' value is at
stake due to canceling this show. So while Charlie Sheen has
grabbed headlines, the stock impact for CBS is minimal.
See the complete analysis for CBS.