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Is CBS Corporation (CBS) a Survivor?

CBS Corporation (NYSE:CBS) has been a big winner since early 2009 — but so have most stocks throughout the broader market. For those wondering whether CBS Corporation (NYSE:CBS) can continue its upward trajectory, the past month has been less than inspiring.

CBS Corporation (NYSE:CBS)

The good news is that CBS Corporation (NYSE:CBS) has continued to grow earnings. Since an atrocious 2008, when diluted EPS came in at -$17.43, earnings have steadily increased on an annual basis. The past four years have all been profitable, and diluted 2012 EPS came in at $2.39. The bad news is that CBS Corporation (NYSE:CBS) suffered a revenue decline in 2012.

Does this indicate a change in CBS’s overall fortunes? If you look at the last several quarters, the answer to that question would be no. Revenue has grown modestly but steadily on a quarterly basis; the company’s first-quarter revenue increased 6.40% year over year. In addition to increasing subscription revenue, CBS Corporation (NYSE:CBS) has enjoyed:

  • Strong content demand
  • Consistent syndication sales
  • Reverse compensation from affiliate
However, those aren’t the only positives for CBS.

Wheeling and dealing

CBS Corporation (NYSE:CBS) was in danger of losing NFL broadcasting rights this year, but it extended its contract through 2022. The importance of this deal shouldn’t be overlooked, since the NFL is consistently the most viewed program or event on television on an annual basis. CBS also recently acquired the remaining 50% stake for TV Guide Digital, which includes TVGuide.com.

Other important deals include agreements with Hulu, Amazon.com, Inc. (NASDAQ:AMZN), and Netflix, Inc. (NASDAQ:NFLX). Netflix, Inc. (NASDAQ:NFLX), Amazon.com, Inc. (NASDAQ:AMZN), and Hulu are no strangers to growth, which is a big plus for CBS. These deals will increase content availability for Netflix, Amazon.com, Inc. (NASDAQ:AMZN) Prime Instant Video and Hulu. Therefore, all parties are likely to remain happy. That’s always the best kind of deal. Through all streaming video deals, CBS is seeing double-digit growth. Not bad!

What does Nielsen say?

The popularity of CBS television shows is important. The more viewers a show attracts, the more revenue CBS can accumulate through advertising. Let’s see how well CBS is doing in this area.

Below are the Nielsen 2012-2013 Season Network Primetime Series Rankings. CBS cracked this list nine times:

No. 2 The Big Bang Theory

No. 9 Two and a Half Men

No. 11 NCIS

No. 14 Two Broke Girls

No. 18 Survivor: Philippines

No. 20 NCIS: Los Angeles

No. 21 Person of Interest

No. 22 Criminal Minds

No. 25 Mike & Molly

CBS also cracked the Top 10 Total Viewers list five times:

No. 1 NCIS

No. 3 Big Bang Theory

No. 4 NCIS: Los Angeles

No. 5 Person of Interest

No. 10 Two and a Half Men

CBS has a knack for finding creative talent. That being the case, CBS should continue to deliver top-tier programs that draw wide audiences.

Is CBS the best option?

Despite its successful deal-making and popularity, CBS might not be the best option in the space.

From a valuation standpoint, CBS is trading cheaper than News Corp (NASDAQ:NWS) and The Walt Disney Company (NYSE:DIS)



CBS Forward PE Ratio data by YCharts

Cheap might be appealing, but CBS is also the most sensitive of these companies to slowdowns in advertising. During the financial crisis of 2008/2009, when ad sales shriveled, the stock fell like a rock in a bottomless pit. News Corp (NASDAQ:NWS) held up a little better, but The Walt Disney Company (NYSE:DIS) held up best.

Disney didn’t exactly hold up well, considering it dropped approximately 50% at its lowest point during the financial crisis. But that was still better than CBS and News Corp, which both dropped more than 60% at the time. Disney likely held up best thanks to its incredible diversification.

Though CBS is highly diversified, not many companies can hold a candle to Disney when it comes to diversification. Top-notch diversification, quality debt management, and brand recognition are likely to make Disney the safest and best long-term option in the group.

It’s easy to forget that The Walt Disney Company (NYSE:DIS) is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011.

The article Is CBS a Survivor? originally appeared on Fool.com.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Netflix, and Walt Disney. The Motley Fool owns shares of Amazon.com, Netflix, and Walt Disney. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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