DBRS Rates CBS Corporation at BBB

Dominion Bond Rating Service (“DBRS”) has today assigned ratings to CBS Corporation (“CBS” or the “Company”) as indicated above.

CBS became a separate publicly traded entity following the split-up of (old) Viacom, into (new) Viacom and CBS. In addition, CBS assumed essentially all of (old) Viacom’s debt obligations, which are close to US$8 billion, and received a special US$5.4 billion cash dividend from the company. Concurrent with this report, DBRS is publishing its first report on (new) Viacom.

The above rating is underpinned by CBS’s strong business profile and consistently robust free cash flow (before working capital), which approached US$1 billion in 2005. CBS is a market leader in nearly all of its major business segments. Furthermore, DBRS believes that CBS will retain its leadership positions. This is mainly due to the Company’s top performing content on television, radio, and print, which reinforces premium advertising prices. CBS television broadcasting was consistently number one in television ratings by ACNielsen with its highly popular CSI franchise leading the way. CBS radio broadcasting and outdoor advertising are also among the industry’s largest mass-media outlets offering immense reach for advertisers, and CBS’s book publishing group, Simon & Schuster, continues to post many titles on The New York Times bestseller list.

However, most of CBS’s businesses operate in mature industries with limited growth potential and are highly dependent on shifting audiences. Maintaining audiences is challenging as the success of CBS’s content is vulnerable to popular trends, and consumer tastes and preferences. These audiences are also consuming more content through emerging technology platforms, creating fragmentation in the advertising market and demanding more personalized content that can be accessed any time.

DBRS contends that CBS will have to maintain balance sheet discipline and monetize on emerging platforms to mitigate obstacles facing its traditional media businesses. Leverage is currently reasonable with debt to EBITDA of three times and debt-to-total capital of 31%.