Bernstein’s Juenger reaffirms Market Perform rating on CBS, lifts price target

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Sanford C. Bernstein analyst Todd Juenger reiterated his market perform rating on CBS Corp. stock Friday, and lifted his price target to $46 from $43.

Though the company reported fourth-quarter results late Thursday that fell short of most earnings and revenue estimates, Juenger said he was encouraged that CBS was able to grow advertising revenue despite a drop in ratings at its flagship network, as well as what he sees as “a fairly robust advertising demand environment.”

During a conference call with analysts on Thursday, CBS Chief Financial Officer Joseph Ianniello said first-quarter ad rates at the network are up by a teens percentage over the same period last year, while prices at the owned-and-operated TV stations are up by a mid single-digit percentage. Radio ad rates are about flat with what the unit commanded last year.

The automotive and financial services categories have been big spenders on commercial time in the early weeks of the year, Ianniello said.

English: Les Moonves at the 2009 Tribeca Film ...

Les Moonves, as upbeat as ever on the call, downplayed the ratings weakness. “Obviously the amount of that we’re watching live is only about 60%. So at first blush, looking at what those ratings are were sort of hard to read.

“…Yet we said, guys, just hang on, we are going to be fine. And we are fine … We are winning February sweeps by a lot, and that’s more than just the three special events we’ve had.”

In recent weeks, CBS picked up very strong ratings for the NFL’s AFC Championship Game and Super Bowl XLVII, as well as the 55th Annual Grammy Awards.

Moonves was asked about the push by broadcasters to have ad rates determined by the ratings for shows watched up to seven days after airtime, on DVRs and other devices.

“Regarding C7, once again we are in conversations with advertisers. Obviously, Nielsen has the capacity to give us those numbers immediately. How quickly that will be implemented I don’t know …  There’s a full-scale effort to be able to mention DVR’s and digital and SVOD. And as soon as we can aggregate them all, we get more money.”

Revenue from CBS’ licensing deals with online video providers was down 7% against a year-ago period that included the CW’s streaming deals with Netflix and Hulu Plus.

Meanwhile, the company continued its push for higher retransmission fees from cable, fiber and satellite providers, as affiliate and subscription fee revenue rose 9% in Q4.

Moonves said SVOD licensing revenue will be up in 2013. CBS has traditionally been the media conglomerate most dependent upon advertising sales, with all the peaks and valleys that implies.

“When you look at CBS down the road … the company’s reliance on advertising should go from more than 70% a few years ago to just over half. That’s a very dramatic change in a very short period of time.”

— David B. Wilkerson