Moonves Roadmap Lights A Fire Under CBS Stock, Selling Radio
At media firm CBS ( CBS ), it’s out with the old and in with the new. CBS stock has been on a roll since CEO Les Moonves moved up the ladder to chairman on Feb. 3; the stock touched an eight-month high Wednesday. At CBS’ investor day in New York on Tuesday, Moonves served notice that the media firm may be doing things differently and may sell off assets while at the same time eyeing acquisitions. What’s out? Moonves surprised analysts by disclosing that the media firm will put CBS Radio on the block. What’s new? CBS expects to generate some $800 million in revenue from stand-alone Internet video streaming services by 2020. With gains on Wednesday, CBS stock has climbed 16% in 2016. It’s up 13% since Moonves took over as chairman from Sumner Redstone on Feb. 3 and 27% since the media firm reported earnings on Feb. 11. Shares in CBS were up nearly 3.7% to 54.54 in early afternoon trading in the stock market today . On the TV side of the business, Moonves made clear that CBS plans to invest in content. CBS has 17 pilots in the pipeline this year and owns at least half of 16 of the shows. CBS plans to offer more shows exclusively on its streaming “All Access” website. CBS also offers an online-only Showtime product. “The key theme of the day was the focus on increased content ownership given more OTT (over-the-top) options globally,” said Stifel analyst Benjamin Mogil in a research report. Asked about rumors that CBS is interested in cable network Starz , Moonves said, “We look at everything.” Here’s a sampling of analyst reaction to the CBS investor day, its first since 2011: “The long-term roadmap for CBS’s fundamentals gained a lot more clarity yesterday and supported our thesis that CBS is the best mix shift opportunity in media,” said Daniel Salmon, analyst at BMO Capital Markets. CBS says that it expects $2.5 billion in “retransmission” programming fees in 2020, up from its earlier outlook of $2 billion. Piper Jaffray analyst Stan Meyers wrote: “Management believes by 2020 advertising revenues will represent less 40% of revenues as new initiatives take hold, down from 50% today and 65% a few years ago.” Andy Hargreaves, analyst at Pacific Crest Securities, has a neutral rating on CBS stock. “The overarching theme of the analyst day was a deeper push into production and ownership of content. While this is a quality business, we believe distribution will dominate economics as supply of content increases in an Internet world.” IBD’s Media-Diversified group ranks just No. 101 out of 197 industry groups. Aside from CBS, companies in that group with high IBD Composite Ratings include Scripps Network Interactive ( SNI ) and Walt Disney ( DIS ).