CBS CEO Leslie Moonves: 'We Want a Healthy Netflix'

5:51 AM PST 12/06/2011 by Georg Szalai
Isaac Brekken/Getty Images

UPDATED: He also tells an annual UBS investor conference that his company wants to stay in business with the NFL and has seen continued advertising momentum, with ad demand picking up as the new year approaches.

NEW YORK - CBS Corp. is seeing continued advertising momentum, expects digital distribution deals to provide a continuing revenue stream and wants a healthy Netflix, which has paid up for library content deals with the company, president and CEO Leslie Moonves said here Tuesday in kicking off the second day of the 39th annual UBS Global Media and Communications Conference on a typically bullish note.

He also said his company wants to remain in business with the NFL, even though he didn't confirm that a new long-term NFL TV deal was close to being signed.

Asked about the advertising market late in the year, Moonves said scatter ad market sales remain up in the mid-teens percentage range at CBS, even though competitors with weaker ratings are not doing as well. With the year-end approaching, "demand is picking up again," he said, and trends in the first quarter are looking "promising" with few cancellations. Summarized Moonves: "We're feeling good about advertising" - both nationally and locally.

Moonves on Tuesday also once again lauded the "extremely solid" programming schedule at CBS and suggested that the broadcast business is" taking share away from cable," he said.

Asked about concerns that broadcast TV may face some fallout from the availability of more content in new forms, Moonves said there was no sign that cable, the Internet or anything else has hurt ratings or financials. 

Asked about Netflix and its recent subscriber issues, Moonves said: "We want a healthy Netflix...We're rooting for them. We hope they continue to remain strong" and gain subs. The company has become "much more of a friend than a foe," he said. And Moonves said international growth by Netflix makes CBS "very excited" about potential upside in the likes of the U.K. and Canada.

Asked about recent online content deals more broadly, which some analysts have predicted will slow down, Moonves said "the future looks extremely bright for this revenue stream to continue forever." And overall deals this year have turned out better than expected.

He reiterated that hundreds of millions of dollars in deals for library content are flowing to CBS Corp. "Exclusivity we have avoided," because it is a "dirty word," he quipped. After all, the company wants to be open to whoever else gets into the digital distribution space, including Apple and Google. Other companies are "kicking the tires" for additional digital distribution deals, he said. "You have not heard the last of these deals."

Moonves also reiterated on Tuesday that "primary engines" for his company are the CBS network and Showtime, which he called the "family jewels." With retransmission fees rising and syndication strong, "why would you mess with that," Moonves said.

Speaking of Showtime, Moonves told the UBS conference that Homeland is "the best show on television." He added: "It's a great hit." He later told The Hollywood Reporter that he is, of course, proud of all the hit shows on his networks.

Moonves told the UBS conference that Showtime continues to look for more original content, including upcoming Don Cheadle comedy House of Lies, which he accidentally called House of Cards, the name of Netflix's first push into original programming, before correcting himself right away.

The CBS boss also got a question about the future of football content on the network. The NFL is reportedly close to signing an eight-year extension of TV rights deals to 2021 with broadcast partners CBS, Fox and NBC that would earn it about $3.2 billion a year, a 60 percent increase over the current contract.

"I assume we'll continue to be in business with the NFL," Moonves told the UBS conference. It is "an unbelievable property" as even a bad football game outrates most programming, he said, adding that CBS is making a lot of money from the CBS. While retransmission consent fees will continue to rise from current levels, sports deals will take up "some of that money," Moonves said, but described this as "nothing to worry about." Nomura analyst Michael Nathanson said early Tuesday that 2014 could mean some headwinds from a new NFL deal for CBS.

The cost for the NFL should go up since it has done "extremely well," but Moonves emphasized that the league "likes their partners to be strong" and make money. "We hope it continues for many years."

Asked about his broader plans for sports coverage, Moonves said: "We really love the mix of sports programming we have…I'm not looking to expand…We're as solid as we have ever been." He pointed to the company's NFL, SEC, NCAA and golf events coverage.

Confronted with the debt crisis and weak economy in Europe, Moonves said affected markets like Greece and Italy have remained solid for CBS as companies there have continued to buy its content.

Moonves also said that CBS has no major revenue from reverse retrans deals with TV station groups yet, with 2013 starting to see financials from that revenue stream becoming more significant. His firm looks at each station group separately though, and there isn't a finite solution, he emphasized. Some struggle, so "we're not going to go after them as much," Moonves said, describing overall network-stations relationships at CBS as good.

Asked about the use of cash at CBS Corp., Moonves said it could well raise its dividend next year. And while it plans no major acquisitions right now, the company will keep its eyes open for possible deals if they make financial and strategic sense, he said.

Moonves started the second day of the UBS conference. Monday night, UBS had organized a cocktail reception at a bar near the conference location, the Grand Hyatt hotel in midtown Manhattan. Among those schmoozing at the reception were Aryeh Bourkoff, vice chairman, head of investment banking, Americas at UBS, Madonna manager Guy Oseary, ICM's Patti Kim, Showtime boss Matt Blank, TiVo CEO Tom Rogers, Dish Network board member Carl Vogel, Time Warner CFO John Martin, Anschutz executive Daniel Benel, Electronic Arts CFO Eric Brown, Katherine Keating, the daughter of the former prime minister of Australia, and Iconic Entertainment president and CEO Larry Aidem who previously ran the Sundance Channel.
 

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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