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On May 30, 2014, we issued an updated research report on CBS Corporation (CBS - Analyst Report) following the company’s first quarter fiscal 2014 results.

CBS Corp’s quarterly earnings per share of 78 cents grew 7% year over year and was ahead of the Zacks Consensus Estimate. However, the shift of Super Bowl broadcast to Twenty-First Century Fox, Inc. (FOXA - Analyst Report) marred its quarterly revenues of $3,856.0 million, which fell short of the Zacks Consensus Estimate and declined 4.6% year over year.

CBS Corp. hinted at a robust fiscal 2014. The company expects a good run in advertising in the second half of the year as political spending increases. Additionally, the telecast of Thursday Night National Football League (NFL) for 8 weeks will add to its advertising revenues. Moreover, the company’s growth momentum will get a boost from the increasing reverse compensation from affiliates, strong demand of its content, digital distribution, more syndication deals and retransmission consent revenues.

The company anticipates CBS Television Network to be a major growth driver. CBS Corp. expects retransmission fees to hit the $2 billion mark in 2020.

CBS Corp. continues to benefit from its content monetization as well as streaming deals. After successfully licensing Blue Bloods and Hawaii Five-0, the company expects to put more of its programming on these platforms in 2014, which will boost its studio bottom-line results. Apart from this, the company has announced that it will return $6 billion to its shareholders in fiscal 2014.

However, CBS Corp. faces rise in programming costs in the second half due to a new agreement with the NFL along with the addition of the Thursday night NFL. Also, unfavorable currency fluctuations and competition from other stalwarts like Time Warner Inc. (TWX - Analyst Report) pose concerns.

CBS Corp. currently carries a Zacks Rank #3 (Hold).

Key Picks from the Sector

A better-ranked media stock worth investment is The Walt Disney Company (DIS - Analyst Report), which carries a Zacks Rank #2 (Buy).


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