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CBS Corporation (CBS): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

By: Zacks.com
Posted: 3/5/2014 7:00:00 AM
Referenced Stocks: CBS

Summary:
CBS Corp. continues to focus on diversifying its revenue streams to lower dependency on traditional advertising revenues. These include reverse compensation from affiliates, digital distribution, and retransmission consent fees. At the same time, the company is keeping up with changing trends and to cater to need of cord cutters, it has launched two over-the-top channels. Moreover, it will launch an independent streaming service for its premier channel Showtime, somewhere in 2015. All these prompt us to upgrade our recommendation on the stock to Neutral. However, rise in programming costs and unfavorable currency fluctuations continue to be concerns. Further, an unimpressive content licensing pipeline for the next two quarters will result in tougher year over year comparisons.

Overview:

Based in New York, CBS Corporation (CBS) owns the top media franchises. The company now reports under four broad segments following the separation of its Outdoor Unit.

Entertainment Segment comprises CBS Television Network CBS Television Studios, CBS Global distribution Group and CBS Films, the producer and distributor of theatrical motion pictures and CBS Interactive, which operates one of the leading online content networks for information and entertainment and includes leading brands, such as CNET, CBS.com, CBSSports.com, GameSpot, TV.com, CBSNews.com, ZDNet, Last.fm, and MetroLyrics.com.

Cable Networks Segment comprises the premium subscription program services, Showtime Networks the cable network focused on college athletics and other sports CBS Sports Network and a venture between Showtime Networks and Smithsonian Institution, Smithsonian Networks.

Publishing Segment comprises Simon & Schuster, which publishes and distributes consumer books in printed, audio and digital formats (audio downloads and electronic books) both domestically and internationally under imprints such as Simon & Schuster, Pocket Books, Scribner and Atria Books.

Local Broadcasting Segment comprises CBS Television Stations consisting of 30 owned and operated TV stations, and CBS Radio, consisting of 126 radio stations owned and operated in 27 U.S. markets as of Feb 11, 2014.

On Jan 16, 2013, CBS Corporation announced its plan to convert its CBS Outdoor operations in North America and South America into a real estate investment trust ("REIT") and divest its Outdoor businesses in Europe and Asia, which has been reflected as a discontinued operation in the books as of Dec 31, 2012. The company launched an IPO in the first quarter of 2014. Subsequently, CBS divested 81% of its stake in the unit in Jul 2014, thereby completing the split-off.

CBS Corp. was born out of Viacom when the latter split into two publicly traded companies New Viacom and CBS Corporation on Dec 31, 2005. Each outstanding share of Viacom's common stock was converted automatically into a right to receive half a share of New Viacom common stock and one CBS common share. New Viacom retained MTV Networks (MTV, VH1, Nickelodeon, Nick at Nite, Comedy Central, CMT: Country Music Television, Spike TV, TV Land and many other networks around the world), BET, Paramount Pictures, Paramount Home Entertainment, and Famous Music.


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