Leslie Moonves Predicts Soaring CBS Retrans Revenue, Long-term Football Prospects
In announcing record results for CBS Corp. in the final quarter of 2013 and for the full year, an ebullient CEO Leslie Moonves made two $2 billion announcements.
First, CBS will buy back $2 billion of its own shares just in the first quarter of 2014, which is about as much as the company bought back in all of 2013 and double what it bought back in all of 2012. "We are doing this because of the confidence in our growth prospects," said Moonves, promising that returning value to shareholders "will remain a top priority."
The other $2 billion figure was how much Moonves said CBS now expects to receive from retransmission consent agreements with cable and satellite operators and from reverse compensation deals with network affiliates it does not own.
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Moonves had said in the past that CBS would get $1 billion from those sources by 2017. He raised the ante again on Wednesday. "Clearly that's quite a jump," said Moonves, "but we've exceeded our target every time we've given one, and we have tremendous confidence in our ability to realize the full value of CBS going forward."
Moonves downplayed the importance of the upcoming legal battle with Aereo, an over-the-top service that takes broadcast signals and resells them to consumers. He said CBS, which is taking the case to the U.S. Supreme Court with other broadcasters, is confident it will prevail despite having lost most lower court rulings.
"But no matter what happens," said Moonves, "we have a whole host of compelling business alternatives that will build our financial prospects. We can adjust and thrive no matter how this situation unfolds."
Moonves didn't rule out starting a new over-the-top service to compete with Aereo and others, alone or with other broadcasters, if that's what it takes to protect their content.
Once again declaring that "this is a golden age for content companies that have the best programming," Moonves pointed to Showtime content in particular as an ongoing new source of content that can be exploited in many ways around the world.
He called out Homeland ending its third season with its best ratings ever, up 21 percent over the prior year; and both Ray Donovan and Masters of Sex in their first year had even stronger ratings than Homeland had in its first year.
Moonves noted that CBS owns 100 percent of those shows, as it does The Millers, which he called TV's most successful new comedy. He said they are also making shows (or pilots) for others such as ABC, Fox and USA Network.
The result of these sales, along with growth in the sale of shows to streaming services including Amazon and Netflix, growing retransmission and reverse compensation revenue, is that CBS is no longer heavily dependent just on advertising.
CBS COO Joseph Ianniello pointed out they have actually held back a number of shows that will also be powerhouses in the aftermarkets, most notably CSI and NCIS. They will put those into multiplatform syndication, eventually creating new long-term streams of revenue in line with their strategic approach.
Moonves said that after CBS spins off its outdoor advertising business later this year, it expects to have a nearly even split between advertising and nonadvertising revenues. "Even with our extremely strong Super Bowl advertising sales last year," said Moonves, "42 percent of our revenue (in 2013) is from nonadvertising sources, the highest it's ever been. The trend continues as we speak."
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Amazon deals for upcoming Halle Berry vehicle Extant and returning summer series Under the Dome, as well as a WGN and Hulu Plus pact for Elementary had Moonves bragging about multiplatform and syndication revenue.
Moonves said the multiplatform approach not only doesn't take away from the show's performance on the CBS network, but can enhance it. He cited the show The Good Wife, which has been airing on Amazon Prime. "Lots of this was catch-up viewing," said Moonves, "which is translating to even more interest for the show's current season, and CBS ratings for this show are up double digits."
The network's strength was also a reason the NFL chose CBS for its new Thursday night package of games covering the first half of the coming season. He noted more people watched NFL games on CBS than any other network last season.
"We submitted a very responsible bid that was greatly helped by our position as the top network in America and the best platform to grow the NFL's Thursday night audience," said Moonves. He said while the deal with the NFL for Thursday is for only one year, they hope to impress the league enough with how well they do with the games to win a long-term extension.
Moonves also reiterated that the NFL games will provide a powerful platform in late summer and early fall to promote the networks new lineup, which due to football will now mostly begin in late October instead of mid-September as has been typical in past years.
Some shows, including the hit comedy The Big Bang Theory, may still be launched in September -- on another night -- to take advantage of their power and value on the schedule.
Those shows will also have higher advertising rates, predicted Moonves: "I feel confident right now in saying we will lead the market in pricing and volume."