Why CBS Will Never Be Great Again

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NCIS
CBS"NCIS" is CBS' top rated drama. From left: Mark Harmon, guest star Colin Hanks, and Pauley Perrette.
The market was loving CBS (CBS) on Tuesday, but don't be surprised if the love affair doesn't last. Shares of the broadcasting giant soared nearly 5 percent after it resolved a month-long dispute with Time Warner Cable (TWC) that had kept its channels off the air for the cable provider's 11.7 million customers.

But there will be a price to pay for being unavailable to so many cable subscribers for so much of this summer, and we're not just talking about the immediate hit in the current quarter.

Customers are getting tired of the games that content providers pay, and CBS is feeding the resentment as it tries to get subscribers to pay more for CBS, The CW, and lesser watched channels including Smithsonian Channel and TVGN.

We don't know the terms of new carriage deal, but we know who's actually going to be paying the price: The average Time Warner Cable video customer's bill is up 8.5 percent over the past year.
Is it any wonder why the pay TV industry is starting to lose customers?

Audiences Are Thinning Out

Industry analysts at UBS predict that cable and satellite television providers will lose 250,000 net subscribers this year. It will be the first year that the pay TV industry suffers an annual decline.

CBS can argue that it's better off than its sibling Viacom (VIA), which takes in a more significant level of its television revenue from cable subscription fees. CBS has its namesake broadcast channel and more than two dozen local stations. A lot of people cutting the cord to save money will simply invest in HD antennas that they can use to access over-the-air channels including CBS.

Well, it's not that easy. Local broadcast advertising was actually one of the few CBS businesses to see its profits decline in its latest quarter. The company blamed the decline on the loss of election-year political ad spending, but could it be that folks just aren't as passionate about watching television as they used to be?

We live in the great era of Netflix (NFLX), and while CBS is seeing some healthy increases as it licenses its content for digital distribution, the leveling of the playing field is giving consumers a broader array of available content to choose from. Time people once spent consuming network shows is now spent viewing YouTube clips and web shows.

There's also Netflix, and while CBS and the leading video streaming service did extend and expand their licensing deal this summer, the leveling of the playing field means that it will have to compete harder for viewers in the future.

Oh, there's also the impact that Netflix will eventually have on CBS' Showtime premium movie channel.

'Dexter' Has a Killer Finale in the Works

Showtime may not generate quite as much buzz as HBO gets, but it's a juggernaut when it comes to premium cable. Viewers and critics are flocking to shows such as "Dexter," "Homeland," and "Nurse Jackie" -- the kind of gritty television that broadcast networks aren't airing.

Well, Showtime is going to lose one of its biggest magnets when the "Dexter" series finale airs on Sept. 22.

Sure, Showtime has plenty of other shows. The early success of "Ray Donovan" is encouraging. However, it won't be a shock if some "Dexter" fans cancel their Showtime subscriptions after the last episode. Why keep paying when Netflix has a much broader selection of shows and movies at just $7.99 a month?

Slow Burnout

Investors should be wary of investments where recent market gains have outpaced the fundamentals. Shares of CBS have soared nearly 50 percent over the past year, hitting fresh highs just last month.
Is CBS growing that quickly? Of course not. Analysts see revenue climbing just 5.6 percent this year, slowing to a mere 2.5 percent come 2014.

The market is apparently bidding up shares of CBS on the premise that it will strike it rich in digital distribution, making more than enough to offset the inevitable decline in revenue that it generates from advertising and pay TV carriage licensing fees as cable viewers cut the cord.

Unfortunately, the math doesn't add up. CBS is growing too slowly even in this somewhat favorable climate to be fetching 17 times this year's projected earnings. When Viacom and CBS split into two companies four years ago, CBS was supposed to be the slower-growing media behemoth.

Wall Street's bidding up CBS as if it's a growth stock, and it's not.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our newsletter services free for 30 days.


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michael_vici

我知道我说的可能没有人相信,但我还是要说,因为事实发生在我的身上。中国隐秘共产党用纳米分子控制虐待我二十年,现在我的全身都是纳米分子,这些分子在我身体里散发气体对我进行控制,我的身体感觉麻木,说明纳米分子控制了我的疼痛感知器官。我的全身都被散发的气体所覆盖。所以感觉麻木。只是控制还没什么,关键是纳米分子在我体内做各种难受我的运转,我感觉纳米分子能够一个接一个的进行连续的虐待,也就是说纳米分子连在了一块,进行共同同步作业。我头里的纳米分子更是密集,我用头撞墙都一点感觉不到痛。身体也是,比如晃腿,晃的一点感觉都没有,很麻木,只知道晃动。说明里面的一部分神经也被控制了,但又有气体的麻木的覆盖,导致感觉失灵,只有腿部被软绵绵的兴奋感所驱动。就是说腿被气体覆盖住了大部分的感觉,只留主要的感觉去刺激带动。头部更是被虐待的不成样子,本来头部就被虐待的有些畸形,现在更是被带动着去想,只想一些隐秘共产党要求的事情,可见我的头成什么样子了,就这样我的头还被控制着去纠结一些事情,反复去想,不想做不到,也不行。我的头被控制虐待的实在是不成样子了.总的来说隐秘共产党不一下子伤害你,而是恶心人的一点一点的逐渐的伤害你。关键是现在我没有什么自主意识,完全被纳米分子控制住了我的头和想法,我该怎么活啊?每天纠结于被要求的想法,就是屎尿了有没有擦干净等问题。没擦干净就使劲的纠结,比如擦了几遍大便,可是纸上还有那么一点点,我就要继续擦,反复擦,小便也是,只要是溅到腿上尿了,就要反复的洗腿。还要看尿有没有在阴茎上,在的话就要拿纸擦一擦。我现在被虐待的实在不行了。隐秘共产党代表中国最先进的机器技术,以及最顶端的人,可是他们却做这猪狗不如的事情,这么肮脏的事情也就中国做的出来。这种随意践踏文明道德的人还有什么不能做的,所以我很惨。我的手机号码:13853788002

September 05 2013 at 3:40 AM Report abuse rate up rate down Reply
jacksonville Fl

About all CBS can report, "It's Bush fault" Or how great Obama is. He saved the nation. What crap. No wonder CBS is fading out.

September 05 2013 at 12:50 AM Report abuse rate up rate down Reply
Philip Catalano

I believe that their should be less advertiseing on the Time Warner Cable Company and if they do more advertiseing the customers should pay less for their substriction not more.

September 05 2013 at 12:49 AM Report abuse rate up rate down Reply
susiehill3

BRIAN, CHRIS AND RACHEAL ARE THE ONLY COMMENTATORS WORTH LISTENING TO. YOU CAN DUMP ALL THE REST. I NEVER WATCH WATCH FOX NEWS, WHAT A WASTE OF TIME. FOX NEWS IS A CIRCUS ACT.

September 05 2013 at 12:19 AM Report abuse -1 rate up rate down Reply
lpquant1

who cares?

September 04 2013 at 11:19 PM Report abuse rate up rate down Reply
lpquant1

who cares?

September 04 2013 at 11:19 PM Report abuse rate up rate down Reply
The Macway

Their lib news organization ran it into the ground during rather's reign.

September 04 2013 at 11:04 PM Report abuse -1 rate up rate down Reply
Joey

Think you or whomever wrote this are full of Crap. Television as a whole will never be what it was in the 20th Centruy, but network tv is still enourmously popular and irreplaceable in things like live sports and real time news.

Then we have to remember that not everone can afford Dish or Cable and for them, although of diminished capacity in discretionary buying, it is the sold :"sales tool" for mnay necessities.

September 04 2013 at 9:52 PM Report abuse +1 rate up rate down Reply
lsipsip

Greed will erode reputations every time. Just keep breathing.

September 04 2013 at 9:45 PM Report abuse rate up rate down Reply
begeology

CBS, NBC, and ABC are relics. They are worthless for news and their programs are for stupid people. Just look at all of those worthless reality shows. Only low intelligence people would watch such junk.

September 04 2013 at 9:23 PM Report abuse rate up rate down Reply