Wertheim Schroder lowers CBS rating

The investment firm Wertheim Schroder & Co. lowered its rating of CBS Inc. yesterday, removing CBS from the firm’s recommended list, but rating its stock “above average.”

Wertheim analyst David Londoner said he had expected CBS to post Nielsen ratings for this season above those of last year. “I thought the network would win Friday nights, but there’s no evidence of that yet,” he said.

Friday below expectations

The network’s Friday night program lineup, which consists of “Golden Palace, “”Major Dad,””Designing Women,””Bob” and “Picket Fences,” has performed below expectations, averaging a 20 share in six regular outings, with a ratings slide in recent weeks.

NBC’s premiere episode of a “Perry Mason” movie last Friday dropped the CBS lineup to its lowest share of the season.

Estimate lowered

Londoner lowered his 1993 earnings estimate for CBS 8% to $ 15.50 a share from $ 17, adding that his original estimate was based on the network winning the season by a higher margin. He left his 1992 outlook unchanged at $ 11.75.

The analyst said his revised estimate isn’t based directly on the network’s Friday night ratings, but more on the evening’s influence on the price the network could charge for selling advertising time in the scatter market. “If the ratings were higher, they’d get more for scatter and I was counting on them having higher ratings,” he said.

CBS shares drop

Perhaps as a result of the downgrade, CBS shares dropped 9 1/8 to close at 197 1/4, with 152,000 shares traded on the New York Stock Exchange, compared with average daily volume of 54,900. Two weeks ago, the company reported 1992 third-quarter net income of $ 42.7 million ($ 2.76 a share), compared to a loss of $ 169.1 million ($ 11.11) for the same period a year ago.

According to a round-up conducted by the Institutional Brokers Estimate System, the average 1992 earnings estimate of 19 sell-side analysts who follow the network is $ 10.29, with a high of $ 11.75, Londoner’s estimate, and a low of $ 8.35.

Despite the downgrade, London was quick to emphasize he doesn’t recommend selling CBS shares. “They’re still No. 1,” he said. “By year end, they’ll be doing a little etter.”

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