CBS (NYSE:CBS), which competes with companies like Disney (NYSE:DIS), News Corp. (NASDAQ:NWS), Time Warner (NYSE:TWX) and Viacom (NYSE:VIA), owes about 11% of its value to outdoor advertising as per our estimates. Outdoor advertising is also known as out-of-home (OOH) advertising and includes advertisement via billboards (including digital) as well as advertisements on bus stops, metro stations, buses or cabs.
Our price estimate for CBS stands at $26.34, a premium of about 5-10% to market price.
A major portion of outdoor advertising revenues comes from billboards and static displays, with local advertising being a key feature. Automobile companies, financial services (mortgage lending, financiers, credit card companies) often utilize these displays to advertise local deals. For CBS, revenues from outdoor advertising suffered a significant drop in 2009, falling from about $2.2 billion in 2008 to $1.7 billion in 2009. The revenues recovered a bit in 2010 and we expect the growth to continue.
Although companies continue to shift their ad spending focus to the internet, outdoor advertising still represents an important niche. Consequently, the market should continue to grow in the years ahead.
(Chart created by using Trefis' app)
Good Returns On Investment
For local advertising, OOH advertising offers a stronger visual impact on a more cost effective basis than newspapers or magazines. OOH is highly customizable, thanks to digital billboards, and offers high relevancy because it targets a specific location. We also believe that OOH advertising has a high retention value because of continuous exposure. According to one study, out-of-home advertising offers higher ROI (returns on investment) than TV or print advertising.  The study puts the figure at $2.80 earned in sales for every $1 spent on out-of-home advertising. 
Despite the emergence of new advertising platforms, this form of marketing remains effective. Some research firms anticipate that this form of advertising could grow at rates of 2.9% to 7.3% in 2011.  We currently project annual revenue growth for CBS’ out-of-home advertising business to be around 4% going forward.
- Global Study Finds Out of Home Advertising Offers Significant ROI, myprintresource.com, Mar 4 2011
- Media Outlook 2011: Out of Home, adweek.com, Sep 26 2010