Q4 led by affiliate fees/content - outlook good
Stronger than expected revenues (+11% vs. +5%) were offset by investment in programming leading to in line OI (+1%). EPS growth of 8% (cons. +3%) beat on below the line benefits. By discipline, advertising was down 3% (unsurprising given difficult political comps) while affiliate fees/subscriptions were up 20% (impressive and sustainable) and content licensing was up 33% (not sustainable but still good). 2018 guidance was for high single digit revenue growth (consensus is only at 4%) and high teen EPS growth (cons. 17%). We remain Overweight on CBS with or without a Viacom deal but near term performance is likely to be volatile.CBS is a mass media company, which operates the following segments: Entertainment, which is consists of the CBS Television Network, CBS Television Studios, CBS Global Distribution Group, Network 10, CBS Interactive, CBS Sports Network, and CBS Films as well as the company's digital streaming services CBS All Access and CBSN; Cable Networks, which consists of Showtime Networks and its digital subscription streaming offering, and Smithsonian Networks; Publishing, which consists of Simon & Schuster's consumer book publishing business with imprints such as Simon & Schuster, Pocket Books, Scribner and Atria Books; and Local Media, which consists of CBS Television Stations and CBS Local Digital Media.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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