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Technology Stocks : VIAB (Viacom Class B shares) formerly CBS -- Ignore unavailable to you. Want to Upgrade?

To: ED_L who wrote (2387)	8/25/1998 10:16:00 PM
From: MGV	Read Replies (1) \| Respond to of 4613

why should I buy more CBS with earnings of penneys and a skyhigh PE? Because: 1. You measure CBS by cash flow growth, not earnings. It is growing free cash flow at a greater than 25% rate. Its price to cash flow is less than 16. The industry average price to cash flow ratio for radio broadcasting is over 42. CBS said its free cash flow grew about 60% over last year's second quarter. "CBS is generating substanital free cash flow after capital spending and interest costs," said Edward Hatch, a broadcasting and media analyst with Warburg Dillon Read LLC. "I think it was a very strong quarter." 2. Its price to sales is around 3 versus industry average of 9 for radio broadcasters and 2.5 for television broadcasters. 3. Its ROE is 9% vs. industry averages of 0.9% and 1.4%, for radio and TV respectively. 4. It is the only pure play network available. Its network business is a loss leader that is generating terrific cross sales for its radio and TV affiliate businesses. 5. Management is highly motivated and has self-interests highly correlated to shareholder interests because the #1 shareholder is Karmazin. Karmazin has demonstrated his sensitivity to promoting shareholder value with Infinity and at CBS. 6. It is defending its share price with a buy back program authorized for $3B. Although many authorized programs are not mplemented, CBS is on record as having bought back $330 M of the first $1B authorized through 6/30/98. In JUly they authorized $2B more. It appears from recent price action that CBS is defending the price ferociously at 27-28 with purchases.