CBS, Left For Dead, Rises

The traditional network TV business was supposed to have begun a sharp decline years ago, killed by the Internet and online video. CBS (NYSE: CBS) proved that is hardly true. Its net income doubled last quarter. The media company’s revenue rose higher by 8% for the period to $3.6 billion. EPS rose 164% to $0.58.

CBS’s fortunes are based on its decision to co-opt the Internet before the Internet crippled it. This is something that most traditional media from newspapers to radio to other networks have not been able to do. At the heart of the CBS results are its content distribution and licensing fees. Also, CBS has used its programming breadth to force cable companies to take its shows and charge greater fees for them.

CBS realized some time ago that Netflix (NASDAQ: NFLX) and Hulu were the future of the success of premium video programming. That has helped radically change the perception of the company on Wall St. CBS shares sold for just above $3 a little more than two years ago. The stock sells for $30 today.

Ironically, CBS is chaired by an 87 year-old man, Sumner Redstone. He is ancient enough to remember when TV was not a real medium at all, and old enough to remember when CBS was the dominant network in the dominant media.

CBS has come full circle from dominance to dominance because it looked into the future and pursued what it saw.

Douglas A. McIntyre