Leslie Moonves: CBS Is Open to Licensing Content to Aereo

1:06 PM PST 07/15/2014 by Alex Ben Block
AP Images/Invision

At a conference, Moonves says Aereo never approached CBS before it went into business, predicts CBS won't bid for the NBA and says it won't buy Univision.

CBS CEO Leslie Moonves said that, while he believes Aereo distorted his company’s position and stole its content, he would still be open to discussing doing business with Aereo if they seek to convert to the cable-satellite model of paying to license shows.

Speaking at the Fortune Brainstorm TECH conference on Tuesday, Moonves adamantly denied in response to a question that CBS refused to speak to Aereo CEO Chet Kanojia about licensing content before Aereo launched.

"They never approached us," said Moonves.

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Instead, he said, Aereo made clear they were going to offer over-the-air signals without paying licensing rights: "This is the way we’re doing business."

Moonves said the first time he ever met or spoke with Kanojia was at CES in Las Vegas earlier this year at a dinner event.

Moonves said he regularly talks to Barry Diller, whose company was the primary backer of Aereo, because they are friends, and he used to work for Diller 30 years ago.

“Barry and I decided about a year and a half ago to never speak about Aereo,” said Moonves. "It was better for our relationship."

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"But literally, if [Kanojia] would have called me," reiterated Moonves, "I would have been happy to meet with him. ... It’s still open if Chet called tomorrow. I never received a call ever, nor did any other network guy I know of."

In other remarks, Moonves said CBS will almost certainly not be a bidder for either NBA or MLB rights because the economics don’t work for them. However, he said the four sports where they are spending big for licensing fees — NFL football, NCAA basketball, NCAA football and golf — are all profitable for his company.

"This year, we're beginning a new 10-year deal with the NFL where we're paying over $1 billion per season for sports rights," said Moonves, "and we're still going to make a profit because the NFL is still the gold standard for live TV. There’s nothing that competes with it. This year, we luckily added Thursday Night Football to that."

Moonves said CBS in the past two years has created "a new daypart," meaning programing in summer. "The cable networks were cleaning our clock in the summer," said Moonves. "The networks basically put out a sign on June 1st that said, 'We’re closed until Labor Day,' and the cable companies wisely jumped in and took that. So last year we were able to set up a new model with Under the Dome, and this year with Under the Dome and Extant."

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Moonves touted the deal with Amazon, which puts those summer shows on the web service four days after airing on the network. He also said those shows have been big successes in international markets.

"Our deal with Amazon is almost like the ratings on CBS is secondary," said Moonves. "These shows are succeeding before they even get on the air."

Moonves, in answer to a question, said for content owners it is a new golden age. He said the CBS focus is on content and that is why they spun off the outdoor (billboard) business, because it is not about content.

"The landscape has changed drastically over the last three to five years because on-air broadcast, although it remains very important and advertising remains very important, the amount of revenue we take from advertising has been reduced from nearly 70 percent to almost 50 percent; because there are now so many different ways to sell our content to Netflix, Amazon, to Hulu Plus, through CBS.com.

"Obviously, the international business is exploding," added Moonves. "American content is still by far the best content in the world, and it is being bought in new territories; it is being paid for more competitively in old territories.

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"It is a very different ball game," said Moonves, "and as we like to say, the upfront part used to be far more important than the back end, and that is shifting."

While Moonves said they are expanding business in Latin America and like others must pay more attention to the Spanish-language market, it is unlikely CBS will bid for Univision if it is for sale.

"Univision is a great company," said Moonves, "but we’re not interested in buying anything right now. We just got rid of an asset [outdoor]. We’re very happy with the hand we're playing right now."

Moonves used the word "frenemy" to describe how business is now done. While Amazon buys CBS content, it also competes for premium viewers with CBS-owned cable network Showtime.

"Look, Comcast pays us a lot of money to carry CBS, but hey, also own NBC, which is our biggest competitor," added Moonves. "That’s the way of the world today. Our competitors are also our friends."

Asked about Amazon and CBS-owned Simon & Schuster, at a time the web company is in a dispute with another publisher over who gets what share of revenue, Moonves declined comment. He said they are currently discussing that with Amazon.

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