) is one of the largest and most well known corporations in America. Along with ABC and NBC, they formed the core of the “Big 3” networks that dominated the TV scene for decades and enjoyed some of the widest and deepest moats in business. In fact, their moat was so wide that Warren Buffett
would eventually invest in rival ABC. Today, however, their moat is shrinking. First, cable came along and gave viewers more options than just the big three networks, which reduced the Big 3’s share of eyeballs. Now, Internet television is changing viewer habits and drastically affecting how networks can monetize their products, and new innovations like YouTube, video games and social networking are competing for viewers’ entertainment time.
Despite those concerns, this is still a great business with fantastic returns on capital. The company generates massive free cash flows, which they’ve used to retire 25% of their shares over the past seven years, in addition to paying some hefty dividend. And CBS still owns a very diverse and attractive set of businesses that are perfectly positioned to enjoy a big upswing in profits as advertising rates continue to recover as the economy gains steam. In fact, famed investor David Einhorn
saw enough catalysts on the horizon and attractive properties at a cheap enough price to pick up a big position in the stock during the third quarter. Continue Reading »