muscleman Posted October 7, 2016 Share Posted October 7, 2016 Don't really know what to say. I think you did your math wrong. https://www.sec.gov/Archives/edgar/data/813828/000081382816000065/cbs_10k-123115.htm Page II-41. OI is about 2.7 bn, excluding one timers. NI is 1.7bn. https://www.sec.gov/Archives/edgar/data/813828/000104746909001824/a2190706z10-k.htm Page II-40. OI is 2.1 bn, excluding one timers. NI is 1.2 bn. Share counts: 670 in 2008 and 484 in 2016. The business growth is 28% in 9 years. About less than 3% a year. Primary increase comes from share buybacks. Please let me know what part of my math is wrong. Thanks! :) Link to comment Share on other sites More sharing options...
glorysk87 Posted October 7, 2016 Author Share Posted October 7, 2016 First, 1.2 to 1.7 is 42% growth, not 28%. Second, not sure why you'd ignore buybacks? They are a real component of return to shareholders. Buybacks were part of my thesis, so not sure why you ignored them. Third, you're excluding any and all future growth for some reason. Remember, investing is forward looking, not backward looking. Link to comment Share on other sites More sharing options...
oscarazocar Posted October 7, 2016 Share Posted October 7, 2016 The 2008 & 2015 EBIT numbers are not apples-to-apples. CBS divested CBS Outdoor in 2014 in an IPO/split-off, so that is $224m EBIT for the Outdoor segment from the 2008 base that you should back out. Backing out restructuring expense & Outdoor, Adj EBIT was $1,931m in 2008 vs $2,843m in 2015. Restructuring expense was $137m in 2008 and $81m in 2015. Link to comment Share on other sites More sharing options...
muscleman Posted October 8, 2016 Share Posted October 8, 2016 First, 1.2 to 1.7 is 42% growth, not 28%. Second, not sure why you'd ignore buybacks? They are a real component of return to shareholders. Buybacks were part of my thesis, so not sure why you ignored them. Third, you're excluding any and all future growth for some reason. Remember, investing is forward looking, not backward looking. I was pointing to the OI for the 28% growth, and I said the better improvement of NI comes mainly from cutting operating expenses in 2010. That's inline with your point that NI grew 42%. But cost cutting has limits. I don't expect it to be cut further, just to be conservative. I am not saying I ignore buybacks. I am saying the NI is kind of stagnant, but you are saying the EPS growth is decent. That's not in conflict either. There are lots of financial engineering tools to use, and I have not said that management's doing anti-shareholder things. Third, I did not say I ignore future growth. I would like to know how a 3% grower can suddenly become a 10% grower in the future. That's not impossible, but I'd like to know how. :) Link to comment Share on other sites More sharing options...
fareastwarriors Posted November 11, 2016 Share Posted November 11, 2016 Shari Redstone Sees Scale in Potential Viacom-CBS Merger Executive says she didn’t support decision to split the two companies a decade ago http://www.wsj.com/articles/shari-redstone-sees-scale-in-potential-viacom-cbs-merger-1478822283 Link to comment Share on other sites More sharing options...
fareastwarriors Posted November 18, 2016 Share Posted November 18, 2016 Shari Redstone Sees Scale in Potential Viacom-CBS Merger Executive says she didn’t support decision to split the two companies a decade ago http://www.wsj.com/articles/shari-redstone-sees-scale-in-potential-viacom-cbs-merger-1478822283 DealBook 2016: A Conversation with Shari E. Redstone Shari E. Redstone, Vice Chair, CBS and Viacom; Co-Founder and Managing Partner, Advancit Capital Link to comment Share on other sites More sharing options...
fareastwarriors Posted November 22, 2016 Share Posted November 22, 2016 AT&T’s Online Version of DirecTV Said to Launch Without CBS https://www.bloomberg.com/news/articles/2016-11-22/at-t-s-online-version-of-directv-said-to-launch-without-cbs Link to comment Share on other sites More sharing options...
glorysk87 Posted December 12, 2016 Author Share Posted December 12, 2016 The Redstones have requested that CBS and VIAB end their talks of a potential merger. Interestingly both companies are tanking on the news, though in my opinion this is a horrible thing for VIAB but a virtual non-issue for CBS. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted January 3, 2017 Share Posted January 3, 2017 http://www.ibtimes.com/heres-why-cbs-future-television-no-one-saw-coming-except-les-moonves-2303668 Link to comment Share on other sites More sharing options...
DooDiligence Posted January 4, 2017 Share Posted January 4, 2017 http://www.ibtimes.com/heres-why-cbs-future-television-no-one-saw-coming-except-les-moonves-2303668 Do you think we may see others in broadcast/cable doing a bit of unbundling/spinoffs or PE buyouts in an attempt to copy the CBS model (or none of the above?) Have you read Cable Cowboy (I haven't yet) & would you recommend it (or something else) to help someone learn how to look at this industry? I think I need to understand distribution... Link to comment Share on other sites More sharing options...
glorysk87 Posted January 4, 2017 Author Share Posted January 4, 2017 Great article, sums up nicely how well positioned CBS is. Moonves has proven one of the most capable media executives around. DooDiligence - Cable Cowboys is a very good read. It explains the origins of the entire business and should give you a much better grip on the industry. Link to comment Share on other sites More sharing options...
glorysk87 Posted March 16, 2017 Author Share Posted March 16, 2017 CBS now has over 3mm subs between All Access and Showtime OTT, ahead of their estimate by an extremely wide margin. The 8mm sub target by 2020 is looking more conservative by the day. In addition, CBS signs a new carriage contract with VZW, expanding Verizon's access to CBS's streaming products and including them in the X1 'portal'. The agreement also includes "future digital platforms" pointing to a more robust relationship in the future, and putting CBS further along the path to achieving it's targeted retrans/reverse comp growth goals. Link to comment Share on other sites More sharing options...
glorysk87 Posted March 30, 2017 Author Share Posted March 30, 2017 CBS is now brushing up against $70. While I think there's likely upside left in the name, if it breaks above $70 I will likely begin to pare down my position. Link to comment Share on other sites More sharing options...
CorpRaider Posted March 30, 2017 Share Posted March 30, 2017 Admin reviewing restrictions on asset sales in section, if I caught the story right. I keep looking at TEGNA and some of the other ones in the space. Man, it just seems like they are still going to cash flow. Maybe the networks should (re?) roll-up all the local "broad" casters and then stream the combined network and local content online and slap adds all over it. Link to comment Share on other sites More sharing options...
glorysk87 Posted May 10, 2017 Author Share Posted May 10, 2017 I sold a part of my position in early April around $70. The timing was somewhat fortuitous, as it seems we're in another cycle of Media Frenzy. I'm seeing and hearing discussions almost exactly like I heard back in 2015 when the entire media space cratered (which also provided me my initial opportunity to buy CBS and some other media names). Fears of sub declines and ad revenue weakness are gripping the entire space again. It never fails to amaze me that the negative media sentiment can bring ALL media names down, even those like CBS who specifically called out strong advertising momentum and an overall increase in subs when including OTT and skinny bundles. But I won't complain too much as I believe it's going to provide another opportunity like 2015. We're not quite there yet, but I intend on rebuying my CBS shares if they get back to ~$55. I also sold SNI shares just shy of $80 and plan to buy again below $60. Link to comment Share on other sites More sharing options...
glorysk87 Posted October 11, 2017 Author Share Posted October 11, 2017 CBS shares getting back pretty close to my target to start buying again. If we get a little lower I will likely begin to acquire shares again. Nothing fundamental about the story has changed, though sentiment remains extremely negative in the entire space. Something to consider as well - sentiment on Nielsen's new total content and total audience measurement shifted has notably shifted in a positive direction in the last few months. I have a feeling the push to get a more comprehensive measurement system implemented as a new currency will gain steam over the next year, which will be a substantial positive for CBS and their ability to negotiate advertising rates. Link to comment Share on other sites More sharing options...
Leverage Capabilities Posted October 17, 2017 Share Posted October 17, 2017 Any concerns over NFL numbers being down this year? I personally think it's just noise but saw that a CS analyst put out a note yesterday regarding this. Link to comment Share on other sites More sharing options...
glorysk87 Posted October 18, 2017 Author Share Posted October 18, 2017 Not worried about viewership numbers. Only concern I have over NFL is if the tech guys like FB or AMZN start to really bid up prices hard when the contracts are up for renewal. Otherwise not too worried. NFL values reach above all else, so the broadcast guys remain in pretty good spot. Link to comment Share on other sites More sharing options...
Leverage Capabilities Posted October 18, 2017 Share Posted October 18, 2017 Agreed. I don't think the contracts are up for renewal until the 2023 season if i remember correctly. I honestly don't see a FB or AMZN fully supplanting the networks for coverage. Think it'll probably come in the form of a JV / partnership similar to what CBS / Amzn is doing for some of the Thursday night games. Link to comment Share on other sites More sharing options...
KJP Posted October 18, 2017 Share Posted October 18, 2017 glory, Thanks for continuing to follow up on this. I reread your valuation in reply #2 on this thread and had a few questions about it: 1) Are EBIT or EBITDA multiples the right way to value the business given that the company's cash costs of producing content appear to be significantly higher than the programming costs that appear on the income statement? Specifically, CBS's capitalized programming assets increased by $500 million in 2015 and $800 million in 2016, causing FCF to be significantly lower than what an EBIT - Interest - Tax estimate would suggest. 2) Are you modeling $3 billion in incremental revenue, or instead $3 billion from the sources you mentioned that would be offset in whole or in part by revenue declines elsewhere? 3) I know you mentioned you were being conservative, but why use 25% incremental EBITDA margin? Are you anticipating a large step up in programming costs? Link to comment Share on other sites More sharing options...
thefatbaboon Posted October 22, 2017 Share Posted October 22, 2017 I'm used to the high comp in the media space but isn't Moonves' compensation a bit ridiculous?? $30m plus of payments of cash yearly. $30m of RSU yearly. Total comp last three years: $57m, $57m, $70m. Between 2014 and 2016 the stock was essentially flat and shareholders didn't make anything. His latest contract guarantees him similar till 2021 The guy gets paid more than Roberts or Iger who run companies nearly 10x the size of CBS. Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 23, 2018 Share Posted January 23, 2018 Shari Redstone Still Desires Viacom-CBS Merger https://www.bloomberg.com/news/articles/2018-01-12/shari-redstone-is-said-to-still-desire-viacom-cbs-merger Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 1, 2018 Share Posted February 1, 2018 Viacom and CBS Are Preparing to Announce Steps to Explore Merger https://www.bloomberg.com/news/articles/2018-02-01/viacom-cbs-are-said-preparing-to-announce-steps-to-mull-merger Link to comment Share on other sites More sharing options...
Okonomen Posted March 7, 2018 Share Posted March 7, 2018 Really interesting case. However, I notice the following and hope to get feedback on this: CBS looks cheap on EPS, but as content reinvestment is increasing more than content amortization, these businesses does not look as cheap on FCF. So maybe EPS is not the best metric to use? Looking into CBS's cash flow statements it does look like they have trouble with the FCF conversion Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 9, 2018 Share Posted April 9, 2018 Viacom asks CBS to raise its bid by $2.8 billion: Sources •Viacom asked CBS to sweeten its merger bid by about $2.8 billion or almost a quarter more than CBS's offer, people familiar with the matter said. •The move highlighted the wide gap in the U.S. media firms' price expectations. •CBS is now considering its next steps in the deal negotiations, said the sources. https://www.cnbc.com/2018/04/09/viacom-asks-cbs-to-raise-its-bid-by-2-point-8-billion-sources.html Link to comment Share on other sites More sharing options...
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