Glenview Capital raises position in CBS Corporation
Glenview Capital Management: How its 4Q14 portfolio changed (Part 7 of 12)
Glenview Capital and CBS
In 4Q14, Glenview Capital Management increased its position in CBS Corporation (CBS). The fund holds 7,519,648 shares of CBS, which accounts for 2.08% of the fund’s total 4Q14 portfolio. This is up from 1.19% of the fund’s 3Q14 portfolio with 4,254,448 shares.
CBS Corporation in brief
CBS Corporation (CBS) is a mass media company that operates in the following four segments:
The Entertainment segment consists of the CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive, and CBS Films. The CBS Television Network is the most-watched network in the United States with two million viewers per week.
The Cable Networks segment consists of Showtime Networks.
The Publishing segment consists of Simon & Schuster, which publishes and distributes consumer books.
The Local Broadcasting segment consists of CBS Television Stations.
For the year ended December 31, 2014, the Entertainment segment accounted for 60% of CBS Corporation’s total revenue. The Cable Networks and Local Broadcasting segments accounted for 16% and 20% of total revenue, respectively.
CBS generated 13% of its revenue from international operations. Europe contributed 52% to its total international revenue.
In April 2014, the former CBS subsidiary Outfront Media (OUT) completed its initial public offering to form a real estate investment trust.
You can gain exposure to CBS Corporation by investing in the Consumer Discretionary Select Sector SPDR Fund (XLY) and the SPDR S&P 500 ETF (SPY). CBS accounts for 1.21% of XLY and 0.15% of SPY. XLY has the highest weight in CBS Corporation’s peer The Walt Disney Company (DIS). DIS accounts for 7.09% of XLY.
Fourth-quarter revenue growth
During the fourth quarter of 2014, CBS’s revenues increased 3% to $3.7 billion, primarily driven by a 4% increase in advertising revenue. Spending for Thursday Night Football and political advertising at local stations was up 2%. Affiliate and subscription fees grew 11%. Content licensing and distribution was down 3%. EPS (earnings per share) saw growth for the 20th consecutive quarter with an increase of 8% to $0.77.
Full-year 2014 results
In 2014, CBS revenues decreased 1.4% to $13.8 billion. EPS was at an all-time high with an increase of 6% to $2.96.
Commitment to shareholders
During the fourth quarter, CBS repurchased $800 million in shares, twice as much as the company repurchased during the prior quarter. CBS still has $4.8 billion of share repurchases in its current authorized program.
The company issued $1.2 billion in senior notes. CBS plans to use most of the proceeds to repurchase $1 billion in shares during 1Q15.
On January 30, CBS declared a quarterly dividend of $0.15 per share.
New initiatives
CBS Corporation’s (CBS) digital distribution services are building young audiences. In 2014, CBS launched five new popular shows that the company owns. Recently, CBS started licensing the domestic screening rights for its current nonserialized hit shows such as CSI.
For the first time, CBS signed a deal outside the United States. The company entered into a long-term agreement with Bell Media in Canada. Bell Media will introduce Showtime as a stand-alone service provider.
In the next part of this series, we’ll look at Glenview Capital Management’s increased stake in Avis Budget Group, Inc. (CAR).
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