CBS Ranks No.1 Network Season-To-Date; Watch Out For Advertising Revenues In 2014

CBS Corporation‘s (NYSE:CBS) broadcasting network continues its ratings uptrend into 2014 with season-to-date live plus 7-day lift of +0.6 for 18-49 demographic (Briefly, on terminology: “live plus 7-day lift” refers to the ratings for live telecast and the first seven days of viewership on DVR). In terms of viewership, CBS again leads all networks averaging +1.86 million viewers. ^[1] The network is benefiting from its hit slate that includes The Big Bang Theory, Elementary and NCIS.

Higher ratings translate into higher advertising revenues for content owners such as CBS. This could prove meaningful as more than 50% of CBS Corporation’s revenue is derived from advertising. For 2013, the company witnessed 4% growth in advertising revenue to $8.80 billion. This growth was primarily due to a 10% increase at CBS Television Networks. On the other hand, the local broadcasting advertising declined by 4%. ^[2] However, it must be noted that 2013 was a tough comparison to the prior year, which benefited from political and the Olympics spending. We continue to believe that CBS’ advertising will do well in the near term given the solid demand for its content and the company’s continued focus on original programming.

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CBS Remains No. 1 Network In Viewership

Season-to-date, CBS is also No. 1 in its key demographic of 18-49 live plus 7-day DVR lift. For Week 20, CBS had three of the top five programs among adults 18-49. It was the usual slate for the network led by The Big Bang Theory (+2.8), How I Met Your Mother (+1.5) and Elementary (+1.5). ^[1]

The Big Bang Theory has been the star performer for CBS for quite some time. Now in its seventh season, the sitcom still commands a staggering $326,260 per 30-second advertising spot, far more than NBC’s The Voice ($264,575 for the higher-rated Wednesday night show), ABC’s Modern Family ($257,435) and Fox’s The Simpsons ($256,963). ^[3] Recently, the company announced a multi-year broadcast renewal for The Big Bang Theory (Read More – CBS Renewal Of The Big Bang Theory To Continue Growing Advertising Income).

Expect Advertising Market To Trend Better In 2014

The advertising market trended well in 2013, despite the absence of the Olympics or high political spending. By the end of the first three quarters of 2013 (latest Nielsen data available), global advertising spend grew by 3.2% as compared to the prior year period. However, the North American region saw a slight decline of 1.3% during the same period. ^[4] This can be attributed to the absence of heavy political advertisements versus the prior year. Television as a medium continues to show steady growth.  With a 4% increase in advertising spend for the third quarter of 2013, it accounted for 58% of the overall market, according to Nielsen estimates. ^[5] We expect a slight uptick in 2014 advertisement spending due to the U.S. midterm elections and CBS’ new NFL Thursday night package. Content owners such as CBS will benefit from the advertising growth as more than 50% of CBS’ value comes from advertising related businesses. For 2014, we estimate CBS and CW Network revenues at $5.14 billion, 7% higher than 2013, and expect this to grow at an average annual rate of little under 6% to $7.15 billion by the end of our forecast period.

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1. Season-to-Date, CBS Is #1 in Adults 18-49 Live Plus 7-Day DVR Lift, The Futon Critic, Mar 24, 2014 [↩] [↩]
2. CBS Corporation’s SEC Filings [↩]
3. The Big Bang Theory Gets the Highest Ad Rates Outside of the NFL, Adweek, Oct 13, 2013 [↩]
4. GLOBAL ADVIEW PULSE LITE – Q3 2013, Nielsen, Jan 22, 2014 [↩]
5. TV REMAINS THE REIGNING CHAMP, BUT DISPLAY INTERNET ADS ARE THE MVPS OF 3Q, Nielsen, Jan 27, 2014 [↩]