Who's Spending Money on the Super Bowl and How Much Will CBS Make?

Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The Super Bowl is taking place on Feb. 3 at the Mercedes-Benz Superdome in New Orleans, Louisiana. Even those that don’t watch the NFL on a weekly basis know that the Super Bowl is a big deal for the teams involved, the surrounding community and the advertisers. Advertising spending for last year’s Super Bowl game on NBC averaged $3.5 million per 30-second spot, beating the prior year by $500,000. This year, the numbers are expected to take a $500,000 jump once again when CBS (NYSE: CBS) hosts the big game.

Who really spends $4 million for thirty seconds of attention? Quite a few major companies, and some of them keep coming back for more.

PepsiCo (NYSE: PEP)

Pepsi puts out some of the most imaginative commercials via their Doritos brand every year. This year, once again, the brand will be airing more commercials to an audience that will easily exceed 100 million on game day. Both Pepsi and Frito-Lay will be getting the spotlight. It is likely that a Dorito commercial will take the "funniest" commercial award in the eyes of the viewers, and it will likely be one of the most viewed on YouTube in the following days. 

Coca-Cola Company (NYSE: KO)

Coca-Cola will be making their return to the Super Bowl advertising game after it is reported that they picked up three 30-second spots throughout the game. These ads will go head to head with those supporting the Pepsi brand during the game, and I’m fairly certain that both brands will have had a fair share of duking it out in order to get their brands in the game.

Bud-Wei-Ser

More than any other brand, the Budweiser advertisements have stuck in my head. Remember the frogs? How about ‘wasssssssup’? Anheuser-Busch InBev (NYSE: BUD) will once again try to replicate the many great commercials that they have put out during the years, only this time it’ll cost them more. I don't think there's any better crowd for "The King of Beers" to advertise to though, so this will definitely be money well spent. 

How Much Will CBS Make?

CBS is obviously the gainer here. Pepsi, Frito-Lay, Coca-Cola and Budweiser all have their markets under wraps and they are, at least most of the time, battling for scraps. CBS on the other hand is the one that’s taking the money and providing the audience.

NBC hosted the Super Bowl last year and they managed to sell their 63 advertising spots at an average of $3.5 million to make just over $220 million on the game. If the rumored $4 million per ad is correct and CBS can manage the same 63 spots, then they’re looking at making $252 million from the game.

The rights to the games cost CBS an estimated $1.08 billion per year. That gets them a variety of games every single weekend, and while it isn’t known how much they make in the regular season, we can assume that they are doing fairly well for themselves, especially with the occasional Super Bowl boost. 

Is CBS Investment Worthy?

You came to this site for financial analysis, right? So, how strong is CBS as a company? I’d say that they’re in a pretty good place. The broadcaster is the second largest in the world, surpassed only by Britain’s BBC and, despite that, they still have growth potential and plenty of ways to make more money as time goes on.

CBS currently trades with a P/E ratio of 16.5; that’s just blow the current S&P 500 P/E ratio of 16.68. Sales growth over the last three years has been at 3.5% and EPS growth has eclipsed that at 81.8%.  Analysts are fans of the CBS stock, with 15 of the 23 covering it listing the stock as a “Strong Buy.” Overall, the stock has a mean recommendation of 1.61 out of 5.

Anyone looking for yield will find it with CBS. The company pays a quarterly dividend of 12 cents per share yielding 1.24%.

 


Ash1402 owns shares of The Coca-Cola Company. The Motley Fool recommends PepsiCo, Inc. and The Coca-Cola Company. The Motley Fool owns shares of PepsiCo, Inc.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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