The Rise of Armando Nuñez at CBS Global Distribution (Analysis)

10:47 AM PST 10/26/2012 by Alex Ben Block

CBS Corp. CEO Leslie Moonves picked the executive with international experience to exploit new opportunities in the digital world.

At a meeting with the CBS Television Distribution department heads and members of the sales force in Studio City earlier this week, CBS Corp.  CEO Leslie Moonves described Armando Nuñez as “pound for pound, one of the best executives in town.”

The boxing reference was an indication of the high regard that Moonves has for Nuñez’s business acumen and speaks directly to why he elevated him to head TV syndication sales for CBS worldwide as president and CEO of the CBS Global Distribution Group. It also indirectly speaks to why John Nogawski’s nearly three decades in a high-level capacity at CBS’s domestic TV distribution division and predecessor Paramount TV ended abruptly on Oct. 16.

By almost any measure, CBS Television Distribution, which Nogawski ran for the past six years, remains a powerhouse with seven of the top 10 first-run daily series in domestic syndication, including Judge Judy, Entertainment Tonight, Dr. Phil and two Sony shows it distributes, Wheel of Fortune and Jeopardy!

CTD is also a big player in off-network shows, having done top-of-the-market sales deals for a series of hour-long dramas, including NCIS, CSI, Criminal Minds and Hawaii 5-0, first to cable for daily use and then to broadcast for weekend airings, often in primetime.

CTD has faced some recent challenges though. It lost one of its biggest first-run shows when Oprah Winfrey's talk show ended its quarter century run in 2010. That was revenue that was lost and has not been replaced, although company sources insist that by the time Oprah ended, her deal was so rich and the split of revenues so much in her favor that it wasn’t a big financial problem.

Nogawski also had a highly publicized falling out with Katie Couric when she and Jeff Zucker were shopping her talk show. Nogawski balked at the rich deal they wanted and abruptly ended the talks. Couric took her show to Disney/ABC instead where it is the highest-rated new talk show in syndication, although Katie has yet to fulfill the very high expectations of some.

What observers say really hurt him though was that Nogawski failed to develop any significant new first-run syndicated series during his tenure. Many of the long running shows distributed through CTD were acquired or inherited, some as part of King World (including Wheel of Fortune).

Nogawski and his team did also to an extent take the fall for the weak start of the Jeff Probst talk show, which has been a disappointment out of the gate in terms of ratings.

Under Nogawski, CTD further failed to find a first-run or off-network situation comedy hit, the holy grail of TV syndication. Shows like Two and a Half Men and Big Bang Theory are minting money for Warner Bros, while CBS hasn’t had similar comedy success since Everybody Loves Raymond, which was a cable and off-network hit beginning in 2000, but more recently has been pushed further and further into the backwaters of TV syndication.

Finally, some also faulted Nogawski for making some hires that were considered as not being up to snuff. Most notable was Aaron Myerson, who was brought in to head CTD development only about two years ago, and was among the first people pushed out after Nuñez took over. Nuñez replaced Meyerson with industry veterans Maureen FitzPatrick and Joe Ferullo, who was already at CTD as a vp, programming.

Multiple sources at CBS and in the industry say that the leadership change was really driven by Moonves' recognition that the future of the business is in international territories, including cable and digital sales, and that was where Nuñez shined.

“The world is a beautiful place,” Moonves said in September at a Goldman Sachs conference in New York. “We’re going to get paid more and more and more.”

Since he joined CBS in 1999, Nuñez is credited with building the company’s international program sales arm into a billion dollar a year powerhouse. He not only expanded sales for traditional platforms like broadcast and cable TV outside North America, but also pushed into satellite, subscription video on demand, format sales and streaming video (Netflix, Amazon etc.). He also won points for his deals to acquire equity interests in international channels, often offering the use of the CBS library rather than spending a lot of cash. Over the past three years, CBS has struck international channel ventures in the U.K., India, Australia, Eastern Europe, the Middle East and Africa that reach 105 million households.

While still more conservative than some competitors, CBS has made it a point to exploit its library with new digital opportunities as well as continuing to sell shows to TV. Moonves has proudly pointed out in recent comments that I Love Lucy, which last produced a new episode half a century ago, still brings in a cool $20 million a year in revenue.

“The success of our programming is fueling new and growing revenue streams on emerging digital platforms,” Moonves told Wall Street analysts during his company's second-quarter earnings conference call. “Consumer demand is driving this, and we continue to have discussions with all sorts of developing streaming and download services.”

When Nuñez replaced Nogawski, it wasn’t just a personnel shift. It marked a real restructuring of the entire business. Importantly, it also meant CBS eliminated one top management position. Nuñez will not be the hands-on guy running domestic sales, but he will set a high bar for success that could lead to other changes, observers expect.

There is no shortage of challenges ahead for his organization.

Probst’s talk show is sold for two seasons, but there is no guarantee it will remain on air that long. The key will be a decision by NBC, whose owned stations are running Probst, mostly at 2pm, just ahead of Steve Harvey, whose new talk show is considered a success, and Ellen, who is having her best season in years in ratings.

NBC could move Probst to 3am and seek a replacement, possibly Sony’s Queen Latifah talker. Or CBS might swap out Probst for another show, such as a talker being developed around personable chefs Bobby Flay and Giada DeLaurentiis. That might be a better fit for the early afternoon, where the audience advertisers most covet are women 25 to 54 years of age.

Nuñez and his team will also have to launch the new late-night talk show that marks the return of Arsenio Hall. It is already set to air on most Tribune stations and much of the rest of the U.S.

Among existing shows there will be the re-launch of The Insider as part of a deal with Yahoo! to re-brand the Entertainment Tonight spinoff as omg! Insider beginning in January. There is also the question of whether Rachel Ray is making enough progress and has good enough station clearances to continue and how to move The Doctors, which is doing fine, to the next level, and whether the dating show Excused should be excised.

Perhaps more importantly, some of the valuable veteran shows, including Dr. Phil, will come up for re-negotiation in the next year or so (in advance of contracts running out in 2014 in several cases). Dr. Phil has replaced Oprah as the top talk show in the market today.  

“They have to strategize what to do with Dr. Phil,” says one industry analyst, “because four years ago when they set three-year deals, he wasn’t on the upswing the way he is now. The issue will be to get what that show is now worth.”

Inside CBS there seems to be a high level of confidence that Nuñez is the executive who can lead the team into the brave new world of endless opportunity.

The appointment of Nuñez, says a person close to CBS, “is about leadership, strong leadership. Leslie (Moonves) has seen what he has done on the international side where he took traditional licensing and built on top of that. Syndication is still the golden goose. What this new structure does is provide coordinated global monetization of how CBS exploits its programming.”

 

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