Wall St. Speaks Out on the CBS Upfront -- Anthony DiClemente

CBS finished the season in a strong position 1st among adults aged 2554 and 2nd place in the 1849 demo marginally behind NBC which benefited from the Super Bowl It therefore did not come as a big surprise to us that CBS renewed the vast majority of its 201415 lineup With few spots to fill the network is introducing just five new shows this fall which all stand to benefit from the leverage of strong lead insouts Our key takeaways from CBS39s upfront presentation are 1 stability off of 201415 positions the schedule well and the existing lineup is largely preserved 2 the return of Thursday Night Football continues to present a viable promotional platform for new shows while limiting the number of reruns on CBS and 3 Campaign Performance Audit CPA is CBS39s resultsmeasurement solution aimed at demonstrating effectiveness and ROI of ad campaigns on CBS39s platformsAs a reminder CBS39s entertainment segment is 60 of the company39s 2015E revenue and 46 of 2015E operating income with the broadcast network a smaller portion thereof Please refer to our 04212015 upfront preview we estimate that CBS will grow dollar volume commitments nicely this based on 3 CPM increases and a 78 sellthrough rateBringing back what worksFor the 12th time in 13 years CBS will end the season as broadcast39s most watched networkamp160 The 201516 lineup presented at today39s upfront suggests the network will continue to build upon its momentum The network added DC Comics adaptation Supergirl to its lineup as the leadin to Scorpion we note this is not a CBSowned showamp160 Other new shows Limitless based on the 2011 film starring Bradley Cooper and Code Black a medical drama will act as lead outs to NCIS New Orleans and Criminal Minds respectively While Supergirl is a slight deviation from CBS39s typical playbook the success of recent superhero shows including The Flash on CW of which CBS owns 50 suggests this could be a worthy venture Overall our take is that the new schedule represents a good mix of reliable often olderskewing procedurals returning freshman series and newer differentiated shows that should preserve ratings momentum Further the conclusion of 15year veteran show CSI is an event worthy of note The addition of Stephen Colbert who will replace David Letterman on the Late Show should spearhead a latenight shift towards a younger target audienceThursday Night Football facilitates more original programming and provides a promotional platform for new shows The return of Thursday Night Football enables CBS to schedule more original programming later in the year limiting the number of reruns the network will air throughout the season Repeats have largely underperformed given stepped up industrywide competitiveness in the arena of original programming Having the NFL on Thursday nights also creates a powerful promotional launch pad for the company39s fall lineup We therefore believe that CBS39s chances of generating a hit show are greatly enhanced creating additional advertising growth potential leverage in retransmission consent fee negotiations as well syndication opportunities down the lineCampaign Performance Audit CBS39s answer to the big data gameCBS also highlighted its attribution analysis platform that aims to demonstrate TV39s reach power and ROI to advertising clients CPA incorporates several 3rd party data comprised of numbers from Nielsen units including Catalina Solutions Buyer Insights MotorStats MRI Fusion Brand Effects and Cambridge Media Demand Landscape These connect purchase data with television viewing data across a wide range of consumer categories CBS will utilize this performancebased data to assist clients in achieving ideal reach frequency targeting and placement on CBS marketing campaigns We believe these ad tech investments may offset some of the concerns advertisers typically had relating to the lack of precise targeting and a clearer ROI analysis within TV advertisingFig 1 Renewed and New CBS ShowsCBS39s 201516 lineupSource The Hollywood Reporter Nomura research Renewed for a twohour series finale on Sept 27This email including any attachments is private and confidential may contain proprietary or privileged information and is intended for the named recipients only Unintended recipients are strictly prohibited from taking action on the basis of information in this email and must contact the sender immediately delete this email and all attachments and destroy any hard copies Nomura will not accept responsibility or liability for the accuracy or completeness of or the presence of any virus or disabling code in this email If verification is sought please request a hard copy Any reference to the terms of executed transactions should be treated as preliminary only and subject to formal written confirmation by Nomura Nomura reserves the right to retain monitor and intercept email communications through its networks subject to and in accordance with applicable laws No confidentiality or privilege is waived or lost by Nomura by any mistransmission of this email Any reference to quotNomuraquot is a reference to any entity in the Nomura Holdings Inc group Please read our Electronic Communications Legal Notice which forms part of this email httpwwwNomuracomemaildisclaimerhtmCLICK BELOW TO ACCESS RESEARCH REPORTPRESENTATION including important disclosuresUS Media Quick Thoughts on the CBS UpfrontPrepared by Nomura Securities International Inc For complete details of the research together with the associated important disclosures analyst certification valuation methodology and discussion of risks please see the full publication attachedThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillagecom management or associated bloggers

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