As sports fans are by now aware, Tiger Woods announced this morning that he will make his return to golf at The Masters in Augusta, Georgia. This has been the topic of much speculation in the sports world as well as the media in general, and the event is sure to provide a huge boost to television ratings for both networks covering the event. Sports fans and casual observers will be tuned in to get a glimpse of the megastar after he reclusively dealt with significant personal issues of infidelity that have largely kept him out of the public eye but he remained the topic of much conversation.
With so many people interested in the next chapter of the Tiger Woods story, this year’s Master’s is sure to be a ratings blockbuster. The tournament, which will take place April 8th through the 11th, is traditionally one of the highest rated events of the year for CBS, sporting or otherwise. However, it has been estimated that when Tiger Woods is not in the field the ratings drop by about half. This tournament seems to have all the elements needed to attract eyeballs and bring advertisers in droves; human drama, emotion, scandal, celebrity, the potential of redemption, and, oh by the way, sport.
Taking a look at the behavior of CBS Corporation (CBS) stock shows the market is caught up in Tiger Woods saga. This morning, CBS stock was trading lower and lagging the performance of the broad market indexes. Even though there was speculation that Tiger would make his return at The Masters the stock spiked up as he confirmed the rumors this morning. Throughout the day, the stock continued to climb, easily outpacing the market by a wide margin and finished 2.35% higher. While that may not seem like a huge bump, consider that with little other news to speak of on the day the market cap of CBS advanced $312 million. Perhaps most interesting is the fact that most of the sponsorship and advertising deals have been inked for months, so how much extra they can squeeze out of the event remains to be seen.
Bearing in mind that CBS has the rights to weekend coverage of the tournament, would the stock take a hit if he somehow misses the cut? Probably not, as the phone lines at CBS are probably heating up right now with advertisers looking to more prominently feature their ads or work a special partnership deal during what could turn out to be the biggest ratings grab in golf broadcast history. Furthermore, this should increase demand for marketing deals still yet to be signed for future tournaments that will hope to feature Tiger. For what its worth, we have an Overvalued rating on CBS as of this week’s report. However, it is clear that today’s move had very little to do with valuation.