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CBS & Gray Television Extends Affiliate Station Agreement

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CBS Corporation and Gray Television, Inc. (GTN - Free Report) have extended their partnership. The companies reached a multi-year agreement for station affiliation, which contrarily would have elapsed at various times over the next couple of years. However, the value of the deal has been kept under wraps.

Notably, the agreement will cover all 32 markets in which Gray owns and runs its 39 CBS-affiliated television stations. The company collectively cover nearly 5.9 million televisions households in these markets.  

CBS’s Television Networks Distribution, president, Ray Hopkins said: “Through this comprehensive deal, both parties recognize the near and long-term benefits in extending our strong relationship, including the value the number one Network brings to viewers.”

However, the news did not cause much stir in the stock movement. Though, in the past six months the company’s shares have witnessed a sharp decline of 15.3%, wider than the industry’s decrease of 2.7%.

CBS Target Retransmission Revenues for Long-term Growth

We believe the company’s multi-year agreement for station affiliation with Gray will continue to continue to boost affiliate and subscription fee revenues. During the second quarter of 2017, affiliate and subscription fee revenues of $848 million grew 16% on the back of 25% jump in retransmission revenues and fees from CBS Television Network affiliated stations, as well as digital subscription services. Content licensing and distribution revenue advanced 12% to $1,056 million gaining from higher volume of television licensing sales.

In 2016, the Zacks Rank #3 (Hold) company crossed $1 billion mark in revenues from retransmission consent and reverse compensation, a year earlier than anticipated. The company aims to achieve $2.5 billion of revenues from retransmission and reverse compensation by 2020. Several strategic deals with Sinclair, AT&T, Nexstar and others have positioned CBS favorably, enabling it to achieve the retransmission targets much ahead of schedule.

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Better-ranked stocks worth considering include Nexstar Media Group, Inc. (NXST - Free Report) and World Wrestling Entertainment, Inc. . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nexstar Media Group has delivered better-than-expected earnings in the trailing three quarters, with an average beat of 90.5%.

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