TV's Wedding Announcement

The nuptials are set for this fall: CBS (NYSE: CBS  ) is going to wed its UPN television network to the WB network owned by Motley Fool Stock Advisor recommendation Time Warner (NYSE: TWX  ) . And it could be a magical pairing.

While UPN has had its successes, such as Veronica Mars, and the WB has hit paydirt with Gilmore Girls, the sad reality is that both networks have been long on trying and short on hits. But by combining forces, the newly christened CW network will be able to cherry-pick the winners and build what should be a reasonably strong fall schedule.

Don't get me wrong. The CW is already being labeled the "fifth network," and that's exactly what it will be -- No. 5. Disney's (NYSE: DIS  ) ABC, General Electric's (NYSE: GE  ) NBC, News Corp.'s (NYSE: NWS  ) Fox, and CBS's namesake network are locked in a heated battle for the top spot and the spoils that go along with it -- especially the advertising dollars when the fall season arrives.

For perspective, consider that the combined season-to-date ratings for UPN and the WB, according to Nielsen Media Research, are less than that of the current No. 4 network, Fox. Accordingly, I'll be among the first to acknowledge that the new CW has a lot of some work ahead of it.

But that's not to say there isn't some real potential here. The CW, for now, can focus on bright spots such as Kids' WB -- with its five hours of original programming on Saturday mornings -- that has allowed the WB to capture 16 consecutive sweeps victories as the top Saturday morning broadcaster for kids.

The joining of forces is also sure to make for better profitability for both partners. But ultimately, the big winner could be CBS. The impact of a joint venture stake (50%) in a viable profitable network could mean a lot to CBS, which has a third of the sales of Time Warner. Everyone knows that UPN and the WB are struggling separately, but combining the best of both networks could well serve as a positive variable not previously priced into CBS's stock.

Although CBS stock fell by about 2% today, investors would be wise to consider that it sells for 15 times 2006 earnings projections of $1.75 a share. That's not a heady multiple for the company that recently separated from Viacom (NYSE: VIA  ) and has yet to show what it can do on its own -- although today's UPN news is, of course, very exciting. That multiple's also tempting because CBS's core assets should provide the cash flow to support a strong dividend.

We'll have to tune in this fall to see how it all plays out.

Are you looking for the best investments on Wall Street? Fool founders David and Tom Gardner recommend two stocks every month in theirMotley Fool Stock Advisornewsletter. Try a satisfaction-guaranteed subscription free for 30 days.

Fool contributor W.D. Crotty does not own any shares in the companies mentioned, but he will be watching Veronica Mars tonight. Clickhereto see The Motley Fool's disclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 510700, ~/Articles/ArticleHandler.aspx, 10/21/2016 5:21:43 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 8 hours ago Sponsored by:
DOW 18,162.35 -40.27 -0.22%
S&P 500 2,141.34 -2.95 -0.14%
NASD 5,241.83 -4.58 -0.09%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 4:00 PM
CBS $56.49 Up +0.96 +1.73%
CBS CAPS Rating: ***
DIS $92.03 Up +0.10 +0.11%
Walt Disney CAPS Rating: *****
FOX $25.36 Up +0.04 +0.16%
Twenty-First Centu… CAPS Rating: ***
GE $29.07 Up +0.01 +0.03%
General Electric CAPS Rating: ****
TWX $82.99 Up +3.75 +4.73%
Time Warner CAPS Rating: ***
VIA $40.95 Up +0.25 +0.61%
Viacom CAPS Rating: ***