Are CBS Shares A Buy? Will Pixar Sink Disney?

Disney (NYSE:DIS) and Pixar release what could be their first clunker this weekend: Cars 2. The film has received middling reviews at best, a cut below other Pixar films like Up, Ratatouille, Wall-E, and the three Toy Story films, and is the sequel to another Pixar film that didn’t fare quite so well at the box office as other Pixar studio productions. It begs the question, why did Pixar sink $200 million into a sequel to one of their less successful films? The merchandise. Disney is set to release 300 different toys for the second film, and hopes to make more money from the sale of Cars 2 merchandise than it made on Toy Story 3, which brought in over $1 billion worldwide at the box office and $2.8 billion in merchandise sales since its release last summer.

Barron’s senior editor Robin Goldwyn Blumenthal is calling CBS Corp. (NYSE:CBS) a good investment as the mass media companyprepares to roll out another spectacular Fall season. The company’s network station, CBS, has the highest ratings of the big four networks, and brought in the most revenue from recent advertising upfronts for fall programming. The company also owns premium cable’s Showtime, which carries popular original programming like Nurse Jackie and Weeds, as well as broadcasting licensed films.

CBS (NYSE:CBS) produces two-thirds of their content in-house and about 65% of their revenue comes from advertising. CBS produces a lot of popular and award-winning content, and also leads the industry in overseas syndication, which brings in a lot of money for the company with essentially no added cost. CBS stock is trading at $26.86 a share today, and analysts are looking for it to be trading in the low-thirties within the next twelve months. It currently pays a 1.5% dividend yield.