CBS’s Star Turn
(Barron’s)
A sale would only make CBS more attractive to investors like Ken Crawford, a senior portfolio manager at St. Louis-based Argent Capital. He says that CBS, which trades at 11 times its 2013 earnings estimate of $2.82, ultimately could win a multiple closer to the 15 achieved by other pure-play content providers, valuing the stocks in the low 40s.
June 10, 2012 (Robin Goldwyn Blumenthal )
CBS,whose broadcast TV network has been No. 1 with viewers for nine of the past 10 years, is finally grabbing the spotlight on Wall Street.
In the year since our positive piece on the $20 billion media giant (“Stay Tuned for More Good News at CBS,” June 20, 2011), its shares (CBS.A) have risen 23%, to a recent $31.74. But with margins more than double what they were in 2009, the stock could climb another 25% in 12 to 18 months. “It will be a record-breaking year in every financial metric,” CEO Leslie Moonves tells Barron’s. He adds that CBS may soon boost both its 10-cents-a-share quarterly payout and its $1 billion in annual share buybacks. The Street sees CBS earning $2.48 a share this year, versus 2011’s $1.94.
In the recent critical “upfront” market, CBS garnered ad commitments for its fall shows that probably beat last year’s $2.5 billion by a percentage in the high single-digits. It will air the 2013 Super Bowl and has already has sold more than 50% of its ad slots for the game, at rates reportedly above the average $3.5 million per 30 seconds that NBC got this year.
CBS has begun syndicating such top-rated shows as NCIS and the CSI franchise abroad, and that could well boost such syndicated international revenue 50% in a few years. As for whether it will sell its outdoor advertising business, Moonves says he’d consider a deal at the right price.
A sale would only make CBS more attractive to investors like Ken Crawford, a senior portfolio manager at St. Louis-based Argent Capital. He says that CBS, which trades at 11 times its 2013 earnings estimate of $2.82, ultimately could win a multiple closer to the 15 achieved by other pure-play content providers, valuing the stock in the low 40s.
