RBR-TVBR Analysis
Lack of visibility has been a problem for broadcasters for a number of years at this point, but at least one group – CBS – says it’s insight into Q4 is not only clear, it’s also pretty good. TV is going to be up, if you pull last year’s political out of the equation, and radio is looking good as well, according to Wells Fargo analyst Marci Ryvicker.
CBS television is expecting to have a strong finish to 2011 as long as it can maintain ratings – it says the spot market is very strong. The radio group is looking at a +2% Q3 according to Ryvicker, and also seems to be in a growth pattern.
When it comes to managing its finances, it is expected that the company will favor stock buybacks over dividend distributions.
Netflix has been in the news lately, but at the CBS inventory store, it’s been at the cash register – it bought about 7% of the company’s content library. It is estimated by CBS that as much as 40%-50% of its library may have value to online video distributors.
Another source of income that still is waiting to be fully tapped is reverse compensation from the company’s network affiliates. According to Ryvicker, most of the deals done so far have been in smaller DMAs, with large market stations generally coming to bat sometime in 2014. Ryvicker noted that CBS has not as yet played hardball like its competitors over at Fox, but noted that the term “yet” was used by exec Leslie Moonves, as in CBS hasn’t pulled an affiliation out from under anybody “yet.” So things could get interesting a little over two years from now on that front.
In a final note, Ryvicker said that CBS Outdoor is performing well and is not for sale.
RBR-TVBR observation: There are few media groups quite like CBS, with strong O&Os in big markets on both the television and radio side, not to mention one of the major television networks. Given its big market presence, if we were oddsmakers, we’d like CBS’s chances for growth in a strong political year.
