Will The TV Networks Make Me Money? CBS Corporation (CBS), News Corp (NWSA), The Walt Disney Company (DIS)

Page 1 of 2

What do Americans do a lot of? Watch TV, of course! The nation spends 30+ hours watching TV every week. That’s over 4 hours per day! There are companies making heaps of cash out of this habit that the nation has. Advertisers, TV networks, content producers, and more all reap the benefits of this TV watching, even if we start cutting the cable.

One of the big trends that Nielsen noticed in 2011/2012 was that we had started watching our content more on mobile devices rather than sitting in front of the TV. Despite this, I think that the TV networks will still manage to get their content in front of viewers both on TV and on a device such as the iPad. The major TV networks such as The Walt Disney Company (NYSE:DIS)’s ABC, CBS Corporation (NYSE:CBS) and News Corp (NASDAQ:NWS)’s. will continue to produce quality content while selling advertising to America’s largest companies even if a technological advancement comes along.

The Walt Disney Company (NYSE:DIS)TV Content

Disney, CBS, and Fox are three of the largest content producers on the planet. Shows like Two and a Half Men from CBS are aired worldwide. Fox has some of the great, worldwide recognized, animated brands under their wing with The Simpsons and Family Guy. Then there’s Disney, their Disney channel is broadcast around the world with all the content that they produce for it. Disney shows such as Once Upon a Time also have a worldwide following.

Content costs a lot to produce on the levels that these networks produce on. Such high levels of entry into the business leave these companies atop the podium, only competing with themselves.

How Do They Make Money?

Disney, Fox, and CBS make money by airing advertisements on their networks. They also make great returns on their content investment by licensing their shows to networks in other countries, online content providers such as Netflix, Inc. (NASDAQ:NFLX) and Hulu, and to memorabilia manufacturers who produce tangible goods based on the shows.

What they’re essentially building is a great big nest of characters, content, jokes, and images that could one day be sold on for more money. One of the great examples is that of Marvel, a company that Disney acquired. Marvel created one of the largest character and content libraries on the face of the planet. They then made sure that people knew who Spiderman and The Hulk were. Once people know the characters, and if they’re loveable enough, a treasure trove of cash awaits.

Biggest Successes

All three companies have great troves of content that they could one day sell on. The aforementioned Two and a Half Men from CBS has been airing since 2003 around the world. The countless shirts, mugs, and other content from the show that has been sold has earned this show a spot atop the hall of fame when it comes to brand creation. Another CBS success is that of The Big Bang Theory. I can’t count the number of times I’ve seen the word “BAZINGA” across the front of a shirt, a line the shows main character, Sheldon, made famous.

Fox has been hugely successful with their animated features. The Simpsons has been running for well over twenty years on the Network and has managed to surpass the 500 episode mark. I think you’d be hard pressed to find someone in the U.S. that can’t name Homer Simpson. One of Homer’s favorite lines “D’oh!” has actually been added to the English language, I don’t think you can get more successful.

ABC has managed to create some great programs recently. Take Wipeout for example, the TV show has its own hit game on the Xbox, that game even has a sequel. How about Modern Family, a hugely successful comedy that is watched around the world. The Bachelor and Bachelorette are also watched by millions every single week that they air. ABC has also been trying its hand at online originals with the 2007 release of Voicemail.

Investment Worthy?

So, they have lots of great content but does it make these companies investment worthy? Let’s take a look.

Page 1 of 2