CBS revenue shrinks with TV audience

The Tiffany network needs to account for its aging viewers and the overall changes in people's media habits.

By Jonathan Berr Feb 16, 2012 11:49AM

image100/CorbisCBS' (CBS) advertising revenue declined in the fourth quarter and in 2011 despite the network's being home to some of the best and most popular shows on television, including "Big Bang Theory," "Two Broke Girls" and "Person of Interest." How sad is that?

The Tiffany network cited the usual suspects, including lower political advertising sales and lost revenue from the NBA lockout. Advertising revenue fell to $2.51 billion from $2.62 billion in the fourth quarter and to $9 billion from $9.15 billion last year. Fourth-quarter revenue figures missed Wall Street estimates. Net income, however, rose 31% as rising license revenue and cost cutting offset the slowdown in advertising.

CBS needs to address the fact that the network TV audience is shrinking and getting older.

According to data from Nielsen, the median age of the CBS audience rose between 2006 and 2011 from 53 to 56, the oldest of any broadcast network. During the same time, Walt Disney's (DIS) ABC audience age rose from 47.4 to 52.3. Comcast's (CMCSA) NBC audience age rose to 50.1 from 48.5, while News Corp's (NWS) Fox audience rose to 45.4 from 41.5.

BTIG analyst Richard Greenfield has argued that fewer people will watch traditional television in 2012 as people spend more time playing social games. Though Greenfield's call may have been early, he is right that people's media habits are changing.

The broadcast networks are not going to wither away anytime soon. Indeed, the media companies are arguing, rightly, that older audiences are not as "bad" as advertisers believed. For one thing, they have more disposable income than younger people. The network audience is an ideal audience for advertisers that target older consumers such as financial services firms and makers of luxury cars.

Shares CBS are up more than 32% over the past 52 weeks. The average one-year price target on the stock is $32.43, about 10% above where it trades now. Investors should wait to see whether advertising sales will rebound before buying CBS shares.

Jonathan Berr does not hold any shares mentioned here.

Feb 16, 2012 7:18PM
It's not that people watch less TV because they are playing "social games" or glued to their iPhone. It's more about people being tired of stupid reality shows littered through the small percentage of watchable, interesting programming featured by any "network".  More people of all age groups are finding that there are more "things to do" than to watch stupid television as a rule. Sometimes a stupid show can be fun diversion, but I insist on programs that have writers, story, characters and general effort involved to produce. The newest crop of broadcast and cable "network" shows just follow each other's lead. I can't believe that someone still thinks that sexy vampires or werewolves are still a fresh idea. They can also take the talent shows and "competitions" to the recycling bin as well. Time for a good e-book.!
Feb 16, 2012 6:27PM
Two broke girls is meh, but The Big Bang Theory is really funny...
Feb 16, 2012 7:51PM
CBS like ABC and NBC need to become politically neutral to gain any audience.  Their liberal slant and hateful anti-Republicanism turns many,many of us off.  I rarely watch them for just that reason.
Feb 16, 2012 7:41PM
OK...2 Broke Girls and Person of Interest!?!?  Way to overlook the NUMBER 1 show on t.v.   How about NCIS leads the pack and is making CBS a potload of money.  It's also the best show on t.v.  Jeez, writers, let's do a LITTLE homework before you display your stupidity, kay?
Feb 16, 2012 7:03PM
The Cable TV model NEEDS to be adopted by the Big 4 - DVRs have made live watching an uncommon occurrence in many homes, and as a result 22 hours of Prime Time a week is an anachronism.  Clearly cable does less shows but oftentimes better shows, and shows them multiple times a week.  If you have your ratings tied to the old folks who still sit and watch the shows (and the commericals) in real time, you deserve to lose money!
Feb 16, 2012 6:36PM
CBS doesn't run the episodes online after they air, so when I miss a few shows I can't catch up online, I then just quit watching them and CBS.  
Feb 16, 2012 6:21PM
Feb 16, 2012 6:15PM
CBS must be getting wrong information from somewhere.  Two of the worst shows on TV (besides the reality shows, survivor, etc.) are the Big Bang Theory, Two Broke Girls, and their other mindless, stupid, so-called comedies of the same ilk.  One of their better shows, in my opinion, is Person of Interest.  Might try unbiased, non-liberal news, also.
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