Wednesday, September 16, 2009

Radio's fortune is improving


CBS gets an upgrade to “out-perform” from Wells Fargo – which forecasts additional cost-cutting.

Wells has a notably upbeat report on CBS Corporation stock and notes the $160 million in expenses “removed” from CBS radio and TV “during this recession.” The firm sees “room for another $50 million in cost savings post-2009.” That will, of course, improve the bottom line and position CBS to come back quickly once advertising picks up strength (if it has the talent and infrastructure to handle it). But the cost situation is the way Les Moonves indicated several weeks ago – when revenues are rejuvenated, CBS won’t be re-hiring and returning to the previous staffing and spending levels. CBS Radio has undergone a particularly painful pattern of rolling cuts, and those won’t be restored in Dan Mason’s division. (Wells says that after talking with management, it believes the majority of the cuts are “permanent.”) Managers are going to have to make do with what they’ve got, and probably to identify further cuts. But the good news – investor-wise – from Wells Fargo is that “parts of local advertising are bouncing off the bottom.” And with the fateful month of October fast approaching, the “comps” get far easier, as the slide off the edge of the world that occurred last Fall leaves some puny numbers to compare against. Sure enough, CBS stock was up 5% yesterday to $12.43.

From the same publication, a look at other radio companies:

Radio company stocks hit historic depths in the last 12 months on Wall Street, but the recovery is certainly underway. In just the last 90 days, shares of SiriusXM (SIRI) went from 32 cents to 68 cents a share, a more than 100% gain. Radio One (ROIAK) quadrupled in value, from 22 cents to 87 cents. CBS Radio (CBS) went from $5.78 to $12.46 in just over two months, while Cumulus (CMLS) has nearly tripled (50 cents to $1.42), and Emmis Communications (EMMS) has more than tripled (25 cents to 84 cents) in that same time. The stocks of Spanish Broadcasting (SBSA), Entercom (ETM) and Regent Communications (RGCI) have all tripled in value in the past 90 days, while Journal Communications (JRN) and Salem Communications (SALM) have quadrupled. You can check the latest quotes for these stocks by clicking here.

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