CBS Corp. Could Lose $400,000 Per Day in Time Warner Cable Dispute, Analyst Says

1:29 AM PST 08/05/2013 by Georg Szalai
CBS Corp. CEO Leslie Moonves

But UBS' John Janedis predicts a "minimal" stock effect and reiterates his "buy" rating on the conglomerate's stock.

The CBS network going dark in Time Warner Cable markets "could cost CBS Corp. about $400,000 per day, including lost retransmission revenue and a loss of advertising dollars at both the network and the stations," UBS analyst John Janedis said in a report Sunday night.

But that means a negative effect on the entertainment conglomerate's stock of only about 1 cent per share for every two weeks, he said. Concluding that this would be a "minimal" effect, he reiterated his "buy" rating on stock of CBS, led by CEO Leslie Moonves.

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"Our view continues to be that consumers have more loyalty to the content rather than the company, which is responsible for distribution, and with contracts often running five-plus years, CBS can’t afford to take below-market value, given the inability to renegotiate terms," Janedis wrote.

He also predicted that "if history is a guide, this should be resolved in less than two weeks." Some other analysts have predicted the carriage showdown could last several weeks, until the start of the NFL season.

"We took a look back at the stock’s reaction to “going dark” scenarios, such as HGTV/Food with Cablevision in Jan. 2010 (21 days), Fox networks with Dish (28 days) and Cablevision (15 days) in Oct. 2010, MSG with Time Warner Cable in Jan. 2012 (48 days), and Viacom with DirecTV in July 2012 (9 days) and saw little impact on the stock price."

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Meanwhile, Pivotal Research Group's Brian Wieser wrote late Sunday that "we have become increasingly concerned about long-term prospects for CBS" on several fronts. One issue is that "CBS' aggressive and very public efforts to secure retransmission consent revenues from distributors, paired with an overly aggressive legal campaign against Aereo, increases the probability that Congress or the FCC will act to curtail CBS' negotiating leverage in years beyond 2014."

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai

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