CBS, ABC or Fox: Which Broadcasting Network is More Valuable?

CBS (NYSE:CBS) network competes with other broadcasting networks like ABC, owned by Disney (NYSE:DIS), and Fox, owned by News Corp (NASDAQ:NWS), for a pie of the dwindling advertising dollars available for network television channels. Although CBS Network is the most important division for CBS, constituting 34% of the company’s stock, it falls short of ABC and Fox in terms of value generated. In comparison, ABC is only about 5% of Disney’s stock and Fox is about 8% of News Corp’s stock.

Below we discuss all three broadcasting networks in their order of value.

Fox Broadcasting Generates $3.7 Billion Value for News Corp

Fox Broadcasting Network offers a wide variety of programs including popular shows like American Idol and The Simpsons. The network makes money via advertising and licensing. We estimate that Fox Broadcasting constitutes around 8% of $18 Trefis price estimate for News Corp’s stock. This amounts to $3.7 billion based on our estimates of $46.5 billion value for News Corp.

Fox has the largest audience and dominates the 18-34 age group. We estimate that Fox had average weekly viewership of more than 8 million 2009, much higher than its competitors, ABC and CBS Network.

ABC Broadcasting Generates $3.6 Billion Value for Disney

The ABC Television Network is Disney’s broadcasting network that primarily makes money via advertising and licensing of productions. We estimate that ABC constitutes about 5% of $37 Trefis price estimate for Disney’s stock. This amounts to around $3.6 billion based on our estimates of $71 billion value for Disney.

ABC’s comparatively higher value than CBS can be attributed to the network’s higher ad pricing and positive viewership outlook.

CBS Network Generates $2.2 Billion Value for CBS

CBS Network offers news and primetime shows, and makes money via advertising. We estimate that CBS Network constitutes around 34% of $9.22 Trefis price estimate for CBS’ stock. This amounts to approximately $2.2 billion based on our estimates of $6.4 billion value for CBS.

CBS’ lower value results from its declining viewership. We estimate that average weekly viewership for CBS has declined from about 7.5 million in 2005 to about 6.2 million in 2009. Going forward, we expect this decline to continue with increasing popularity of cable networks and CBS’s inability to make headway into the 18-34 demographic, which is dominated by Fox.

For additional analysis and forecasts, here are our models for CBS, Disney and News Corp stocks.