Last week, CBS Corporation (NYSE:CBS) reported Q3 earnings. The company posted adjusted EPS of $0.74: representing a solid -- though not spectacular -- 6% year-over-year increase.

CBS has experienced choppy earnings in 2014 compared to the explosive growth of the past few years, but it has positioned itself for an acceleration in growth going forward. CBS Chairman Sumner Redstone's motto -- "Content is king" -- continues to determine the company's strategy. CBS's strong stable of content and flexible distribution strategy should drive long-term earnings growth.

Ad market problems are overblown

CBS stock has declined more than 20% from the all-time high it hit earlier this year, partly because of worries about the strength of the advertising market. Whereas most media companies receive the vast majority of their revenue from subscription fees, affiliate fees, and other recurring sources, CBS still gets about half of its revenue from ads.

CBS Chart

CBS Corporation 5-Year Stock Chart, data by YCharts.

This spring, broadcast networks like CBS saw a drop-off in demand in the "upfront" market, where advertisers commit in advance to buy ad time for the upcoming TV season. CBS also reported a decline in Q2 earnings driven in part by a weak TV ad market. (Many advertisers are shifting spending to digital channels like social media sites.)

However, CBS benefits from its position as the top rated broadcast network. It currently hosts four of the top five most-watched prime-time shows, making it a vital source of the "eyeballs" advertisers want. This insulates it from most of the turmoil in the ad market, and ad revenue has already returned to growth at CBS.

Churning out top content

CBS has profited from having the most popular content among major networks. Moreover, most of its top shows are made by the company's in-house production unit, CBS Television Studios. Last week, CBS executives highlighted how they are refilling the content pipeline on the CBS broadcast network and the Showtime premium network to ensure long-term success.

The CBS broadcast network premiered three new wholly owned shows this fall -- NCIS: New Orleans, Scorpion, and Madam Secretary -- all of which have garnered solid ratings. A new CSI spinoff is also on tap as a mid-season replacement. Meanwhile, Showtime's new drama The Affair has received very strong early reviews, including an 85/100 rating on Metacritic.

CBS' popular shows represent huge long-term income streams. Even after they go off the air, they can be monetized through syndication, streaming video licensing, DVD sales, and international distribution. (I Love Lucy still generates about $20 million in annual income, more than half a century after it went off the air!)

Creating new revenue sources

CBS is continuing to adapt its business model to better monetize its valuable content. Earlier this year, it set a target of earning at least $2 billion annually in retransmission and reverse compensation fees from distributors and local affiliates. This will reduce its dependence on the comparatively volatile ad market.

CBS also launched a new streaming service called "CBS All Access" in October. It's designed to capture viewers who don't have pay-TV subscriptions, and includes on-demand access to most current CBS network shows and a large catalog of older shows, as well as live CBS TV feeds in about one-third of the country. The cost is $5.99/month.

Lastly, CBS is planning to launch a streaming version of the Showtime premium network sometime in 2015, following HBO's lead. All of these initiatives are steadily boosting CBS' non-advertising revenue.

A great long-term investment candidate

CBS has demonstrated over a period of many years that it can consistently produce content people want to watch. As long as this remains true, everything else -- like monetizing that content -- will sort itself out.

Today, CBS trades for less than 17 times projected 2014 earnings: a very reasonable valuation. The company has reduced its share count by 15% this year through share buybacks and the spinoff of its outdoor advertising business, and it plans a similar reduction over the next year or two thanks to heavy share buybacks.

This reduction in CBS' share count along with strong non-advertising revenue growth should drive strong earnings growth for the next few years. Long-term investors should consider adding CBS stock to their portfolios while it's trading at a discount to its early 2014 price.

Adam Levine-Weinberg is short shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.