Analyst: How Lower NFL Ratings Cost CBS

The National Football League's poor ratings are a reason for investors to pull back on CBS Corporation CBS's stock, according to one Wall Street analyst.

The Analyst

Macquarie Research's Tim Nollen downgraded CBS' stock from Outperform to Neutral with a price target lowered from $69 to $60.

The Thesis

CBS' NFL ratings have fallen 8 percent through the end of December 2017, but this isn't necessarily a new trend or one driven by hurricanes, Nollen said in the downgrade report. (See the analyst's track record here.) 

CBS' NFL ratings have seen two years of "material declines," and it may be safe to conclude this is due to structural changes in consumer viewing habits, Nollen said. The rights to CBS' Thursday nights are up for renewal this season, Nollen said — and the company "may do well to back away.

"And while it's still a ways off to Sunday NFL renewals after the 2022 season, it's not too early to start wondering what happens if CBS either has to endure a margin hit to keep them, or risk losing them to an internet buyer," the analyst said. 

CBS' TV ads are also under pressure, Nollen said. Third-quarter ad revenues as a whole fell 3 percent, and viewership trends for comedies and procedurals in the fourth quarter are negative, including "Kevin Can Wait," where viewership is down 20 percent year-over-year on a live basis. "Scorpion" is down 28 percent and "Superior Donuts" is down 26 percent, according to Macquarie. 

Price Action

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