) recent decision to pull back some of its streaming content from
) library comes at a surprise to the rental company. Although
Netflix has moved into offering its own content, CBS still competes
more directly with companies like Disney (
), News Corp. (
), Time Warner (
) and Viacom (VIA). So what value does CBS see in pulling its
Our price estimate for CBS' stock stands at
, a premium of roughly 10% to the stock's market price.
CBS Pulls Showtime Content
The company will be removing the older episodes of the TV shows
that are currently running on Showtime Networks as soon as the
present distribution deal expires this year. This means that
Netflix will retain the content from older series that have
finished their runs on Showtime, but will lose the present ones.
Interestingly, Netflix seemed to be caught off guard by the move.
This implies that the decision is probably something that CBS
hadn't planned for a long time, and is more of an abrupt move.
We estimate that cable networks constitute about 24% of CBS'
stock value. Almost all of this is attributed to Showtime Networks
with only a little coming from the CSTV network. Naturally, CBS
would like to make the most of a segment that brings almost
one-fourth of its value. Interestingly, this move comes after
Netflix successfully bid for exclusive rights to new TV show
House of Cards
. Looks like CBS is worried that Netflix might be threatening its
While Netflix is a good platform to squeeze extra value out of
old shows that have concluded their run on cable networks, CBS
thinks that it might be better to pull out older seasons of
currently running shows. One way to look at this is that CBS
wants to remind Netflix that it still has a steep climb ahead if
it wants to catch the big name content providers. Beyond this, it
makes sense for CBS to offer older seasons of currently popular
shows behind its own pay-wall in order to generate higher
See our full analysis and $26.34 price
estimate for CBS stock