CBS (NYSE:CBS) will report its Q1 2012 earnings on Tuesday, May 1st. The company has been one of the top performers in the media industry in the recent past and has managed to improve its margins significantly. We expect another quarter of solid performance driven by improved ad pricing, quality content and continued growth in digital licensing and retransmission fee. CBS competes with other media companies such as Time Warner (NYSE:TWX), Viacom (NASDAQ:VIA), Disney (NYSE:DIS) and News Corp (NASDAQ:NWS) primarily in broadcasting and cable networks businesses.
During its last earnings CBS mentioned that the scatter pricing was significantly up over the upfront ad pricing and that bodes well for the company entering 2012. With auto sales remaining strong and signs of economic improvement visible, we believe that CBS would have leveraged its quality content leading to growth in advertising revenues. If we look at CBS’ performance among the big 4 broadcast networks, it appears that CBS has been consistently leading in total viewership count although Fox has done better among the adults.
Furthermore, investors can expect continued improvement in margins as CBS is piloting fewer programs compared to its competitors and that should save on some costs. Additionally, the revenues from re-transmission fee, streaming licensing as well as syndication to support margins. We expect CBS to continue its solid performance in Q1 of 2012 as well.
Our price estimate for CBS stands at $33.52, roughly in-line with the market price.