CBS (CBS), Discovery (DISCA), Viacom (VIAB) Buy Ratings Affirmed at Pivotal Research

Pivotal Research affirmed its Buy ratings on CBS (NYSE: CBS), Discovery Communications (NASDAQ: DISCA), and Viacom (NASDAQ: VIAB). Analyst Brian Wieser sees concerns as "too severe," and he doesn't see meaningful change in outlook for affiliate fee revenue growth.

Wieser explained, "Following commentary from several of the larger media conglomerates earlier this month, perceptions around what had been favorably viewed distribution-related revenues took a decidedly negative turn, leading to the weakness in many media industry stocks earlier this month. While investors are now widely concerned that subscriber declines among US-based MVPDs may lead to meaningful deceleration in distribution-related revenues, we believe the concerns are generally too severe. We continue to believe that high single digit revenue growth from distribution revenues remains an achievable target for owners of national TV properties. We base this upon our analysis of historical spending trends on programming by distributors as well as our analysis of spending by consumers on the media and communications-related goods and services that content tends to drive."

"From our analysis we can conclude that if spending on content continued at historical rates economy-wide over the next decade and spending on entertainment related services (including access to internet and cellular services) also continued to grow at its historical growth rates, programming expense as a percentage of consumer spending on relevant services would be lower in the year 2024 than it was in the year 2004 when content was almost exclusively available through conventional cable and satellite services. While we are not suggesting that such growth rates should persist, we are indicating that the industry still has significant room to run, and that expectations over a mid-term time horizon for high single digit growth rates across the industry remain achievable," added the analyst.

For an analyst ratings summary and ratings history on CBS click here. For more ratings news on CBS click here.

Shares of CBS closed at $50.03 yesterday.

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