CBS Positive on Political Ads
According to Bloomberg, CBS Corporation’s (CBS) Chief Executive Officer Les Moonves expects strong political TV advertising revenues in the current fiscal year, which in turn, is anticipated to enhance the company’s profitability.
Speaking at the University of California, Les stated that the company expects the profits to rise by $180 million primarily due to political ads, surpassing the profits of the last presidential election year.
CBS remains well positioned to drive revenue in the coming quarters through its strategic initiatives and operating efficiencies. Management remains optimistic and expects growth momentum to continue in fiscal 2012 based on strong political advertising, reverse compensation from affiliates, strong demand of its content and streaming and retransmission consent.
Moreover, CBS is likely to benefit from an increase in political ad spending as it owns more TV stations than its competitors News Corporation’s (NWSA) Fox and Comcast Corporation’s (CMCSA) NBC.
Earlier, the company posted better-than-expected fourth-quarter 2011 bottom-line results. The quarterly earnings of 57 cents a share surpassed the Zacks Consensus Estimate of 53 cents and jumped 23.9% from 46 cents earned in the year-ago quarter.
Revenue inched down 3.1% year over year to $3.78 billion, which is quite a healthy number as the reported quarter lacked significant political advertising revenues compared with the prior-year quarter. Moreover, the prior-year quarter’s revenue included the second-cycle syndication sale of CSI: Crime Scene Investigation.
We believe that CBS Corporation’s long-term agreements with the NFL, the NCAA, the SEC and the Grammy’s will generate stream of positive cash flows for the company in the long run.
Currently, we have a long-term Outperform rating on the stock. Moreover, CBS Corp. holds a Zacks #2 Rank, which translates into a short-term Buy rating.
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