While CBS delivered the total return of 165%, Viacom, Inc. (NASDAQ:VIAB)’s total return to shareholders was lower, at more than 111%. CBS is trading at $47.70 per share, with the total market cap of nearly $29.3 billion. It is a bit cheaper than Viacom with an EBITDA multiple of 9.5. What might make investors like CBS Corporation (NYSE:CBS) is its plan to convert its outdoor-advertising business into an REIT and attempt to exit its European and Asian outdoor businesses. The REIT conversion of the outdoor business would unlock a lot of value for its shareholders.
Analysts have placed the value for its outdoor-advertising business at around $5-$8 billion, around a fourth of its current market capitalization. With a potential REIT conversion completed in 2014, the CBS Corporation (NYSE:CBS) share price might experience a 25% rise to nearly $60 per share.
Time Warner and its Time Inc. spinoff
Time Warner Inc (NYSE:TWX), another peer, is the cheapest valued among the three. It is trading at around $57.50 per share, with the total market cap of $53.6 billion. The market values Time Warner at around 9.4 times EBITDA multiple. It operates two main business segments: Networks and Film, and TV Entertainment. In the first quarter 2013, Time Warner generated most of its operating income, $1.29 billion, from the network segment while the Film and TV Entertainment segment contributed only $365 million in the first quarter of 2013.
Looking forward for the full year 2013, Time Warner Inc (NYSE:TWX) expects to have a low double-digit growth rate in its adjusted EPS. The upcoming spinoff of its publishing business, Time Inc., would certainly create additional value for its shareholders. Sterne Agee has rated Time Warner Inc (NYSE:TWX) as a buy with a price target of $73.
My Foolish take
Time Warner Inc (NYSE:TWX) and CBS Corporation (NYSE:CBS) could be nice plays on their corporate restructure and spinoff – Time Warner Inc (NYSE:TWX) with its Time Inc. spinoff, and CBS with the REIT conversion of its outdoor business. Viacom, Inc. (NASDAQ:VIAB), an aggressive cannibal when it comes to repurchasing its own stock, could be a good investment opportunity for investors because of its growing operating performance and its potential share buybacks in the future.
The article These Three Media Businesses Could Deliver Nice Gains for Investors originally appeared on Fool.com and is written by Anh Hoang. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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