CBS Could Suffer From Tiger Bomb

Analyst anticipates negative Woods effect
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NEW YORK: Tiger Woods’ fall from grace is likely to drag golf ratings along for the slide. That’s the summation of Rich Greenfield, analyst at Pali Research.

“When Tiger Woods underwent knee surgery last year, golf ratings on broadcast and cable networks typically dropped at least 50 percent--per Golf magazine--from the levels when Woods was playing in those tournaments the year before,” Greenfield wrote. “While we have no way of forecasting the length of Wood’s current exit from professional golf, near-term ratings will be impacted across the key networks that broadcast golf.”

Chief among those networks is CBS, the leading golf broadcast network with coverage of 20 PGS tours in 2009.

“With rights fees fixed in the near-term, an unexpected drop in ratings is clearly negative for everyone broadcasting golf,” he said.

Woods’ cachet as a role model is imploding as more women claim to have had illicit relationships with him. Accenture was among the first of the golfer’s extensive list of sponsors to drop Woods. Gillette reportedly scaled back advertisements featuring Tiger Woods, and Gatorade pulled a beverage associated with him, but neither has cut times completely.

ESPN and the Golf Channel are also like to feel a pinch as well. Greenfield said Golf Channel was likely overvalued in the Comcast-NBCU deal. Golf was among Comcast’s existing cable networks, collectively valued at around $7.25 billion. Pali analysts didn’t have an exact figure for Golf Channel’s contribution.

“However, we do know that Golf Channel is the second most distributed Comcast-legacy cable network--second only to E!,” Greenfield said. It is the fifth most distributed network in the Comcast-NBCU joint venture, with 81 million subscribers, and commands “a very attractive demographics to advertisers,” he said.

The $7.25 billion is derived from a 12.5x EBITDA multiple applied for the Comcast-NBCU deal. “We doubt management’s 2010 EBITDA forecasts, nor the multiple applied, included a Golf Network without Tiger Woods involved in professional golf,” Greenfield said.

(Image by Chase McAlpine)

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