CBS Corporation (CBS) Has its Eye on the Future

Digital growth

Like its industry rivals, CBS is shifting its focus toward higher-margin digital sales of its TV shows and books. The company recently inked a deal with e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN), which will make CBS’ television shows available to Amazon Prime subscribers four days after their broadcast date. CBS also granted Amazon Prime customers exclusive online access to its new series, Under the Dome, based on Stephen King’s best-selling book.

Amazon Prime members pay $79 annually for unlimited video streaming, free book rentals, and free two-day shipping on retail products. Amazon has been using its best-selling tablet, the Kindle, as well as Android and iOS apps to ramp up the pressure against streaming video leader Netflix, Inc. (NASDAQ:NFLX).

CBS’ alliance with Amazon is similar to Disney’s recent deal with Netflix, which grants the latter streaming rights to Disney’s library of television shows and movies. Time Warner has also increased its offerings on Netflix and its premium mobile platform, HBO GO. All these recent moves are geared toward capitalizing on the growth of subscription-based streaming video.

CBS’ strong growth in digital books complements its partnership with Amazon, the world’s largest distributor of e-books. Given the dual-usage of Amazon’s full color Kindle Fire series for books and video, CBS appears to have chosen the perfect partner for growing its digital business.

The Foolish Bottom Line

CBS, Time Warner and Disney all represent strong investment opportunities at current levels, with different strengths and weaknesses. Disney is the most complex business, while Time Warner and CBS are comparatively simpler.

As I stated in a previous article, in the business of media conglomerates, sometimes less is more. CBS’ business is easy for investors to understand — CBS’ primary television network and cable networks are its core sources of growth. The company is reducing its dependence on expensive outdoor display advertising, and more on advertisements and affiliate fees from its television networks. Digital books and streaming videos also present strong opportunities for future growth.

All of these factors suggest that CBS has its ‘eye’ on high growth and strong returns in 2013.

The article CBS Has its Eye on the Future originally appeared on Fool.com and is written by Leo Sun.

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