CBS Strategic Deals to Drive Retransmission Revenues Higher

CBS Corporation CBS sustained focus on increasing subscription-based revenues bode well for its long-term growth. The company also has an extensive library of premium content that it monetizes over multiple platforms.  

CBS highlighted that retransmission consent and reverse compensation are projected to exceed the $2-billion mark in 2020, and is on track to hit $1 billion at the end of 2016, a year before than previously expected. In the second quarter of 2016, retransmission revenues surged 44%. Several strategic deals with Sinclair, AT&T, Nexstar and others have positioned CBS favorably, enabling it to meet the retransmission targets much ahead of its schedule.

The company anticipates increased political advertising in the latter half of the year to favorably impact its performance. CBS has great news for “Star Trek” fans. The company had earlier announced that it will be launching a brand new “Star Trek” television series in Jan 2017. Per the company, the Star Trek series will be launched on CBS Television Network after a special broadcast preview. The fans will be able to enjoy the Vulcan salute once again, more famously known as the “Spock Salute.”

Further, the debut and following first-run episodes will run exclusively on the network’s subscription video-on-demand service, CBS All Access, for the U.S. audience. The company will charge a total of $5.99 per month for both the CBS Television station and access to its video-on-demand services. Recently, CBS Corporation has come up with a new commercial-free subscription for its over-the-top (OTT) service ‘CBS All Access.’

This ad-free model to watch CBS All Access's on-demand shows can be availed at $9.99 per month, $4 higher than the present subscription service, inclusive of commercials. The company informed that subscribers will be able to view CBS All Access's on-demand library of over 7,500 episodes.

We also observed that the company’s shares have gained more than 18% in the past one year on the back of better-than-expected earnings for the six straight quarters. Its earnings of 93 cents a share in the second-quarter of 2016 beat the Zacks Consensus Estimate of 86 cents and surged 26% from the year-ago quarter. Moreover, total revenue of this diversified media conglomerate rose 2% to $3,287 million and also came in ahead of the Zacks Consensus Estimate of $3,222 million, thus marking the third successive quarter of revenue beat.

CBS CORP Price

CBS CORP Price | CBS CORP Quote

On the flip side, the media industry is a highly competitive space and CBS Corp. faces intense competition from other broadcast radio and television stations; cable television networks; and motion picture studios in the market in which it operates. This may weigh on the company’s top-line results.

Zacks Rank & Other Stocks to Consider

CBS currently has a Zacks rank #3 (Hold). Better-ranked stocks worth considering include Cable ONE, Inc. CABO, Liberty Broadband Corp. LBRDA and Cumulus Media Inc. CMLS. Cable ONE and Liberty Broadband sport a Zacks Rank #1 (Strong Buy) while Cumulus Media carries a Zacks Rank #2 (Buy).

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