Expecting an Ad Boost to CBS Earnings

CBS is the last of the media giants to report quarterly earnings, and it's the most reliant on advertising—ads generate about 2/3 of its revenue.

On the heels of a slew of positive of earnings reports (DIS, TWX, CMCSA) on the return of the advertising market and booming political ads last quarter, we can expect CBS to report more ad gains.

The rebounding ad market is one reason CBS shares are up 63 percent over the past 12 months. Another factor which we're sure to hear plenty about in today's earnings call: CBS has the highest ratings of any of the networks.

Wall Street expects CBS to earn 43 cents per share, excluding one-time items, that's up 74 percent from the year ago period. Revenues are expected to come in at $3.86 billion, up 10 percent from last year.

The big questions for CBS on today's earnings call: What's the outlook for 2011 and advertising in particular? How strong will the ad market be now that political ad spending is not in play? Where is the growth coming from and how far out can CBS project? How is Interactive advertising faring?

Another issue: CBS billboard business, which Deutsche Bank analyst Doug Mitchelson says is "way below its earnings potential." Morgan Stanley's Benjamin Swinburne has suggested that CBS could sell the billboard business, which would give CBS enough money to pay a special dividend of at least $3 per share.

And with so many questions about new digital distribution streams and what model—Netflix , Apple , Amazon —will win, we can expect analysts to push CEO Les Moonves for more insight into his long-term strategy. CBS is the only network not to participate in Hulu. Is that working, and where does Moonves see digital dollars?

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