Moonves: Showtime won't miss a beat
Also hints about CBS' upfront presentationNEW YORK -- CBS Corp. president and CEO Leslie Moonves said Tuesday morning that his company's Showtime Networks "will not miss a single beat" and has "significant potential for further growth" despite the pay TV arm's loss of movie output deals with Paramount, MGM and Lionsgate.
Speaking during the company's first-quarter earnings call Tuesday, Moonves told investors that Showtime had strong momentum with 1.3 million new subscribers over the past 12 months, confirming its best run ever.
He said the decision by Paramount, MGM and Lionsgate to create a premium TV channel will "free up $300 million" for Showtime that it will reinvest into more original programming, its own movies and the select "licensing of compelling new films at more favorable terms." All the big studios are tied up in output deals with other pay TV giants, but Moonves said Showtime has talked to other suppliers of film and TV product.
He reconfirmed that movies will remain an important part of Showtime, and highlighted that the current output deals "will satisfy our programming needs through 2010."
Meanwhile, the Wall Street Journal reported Tuesday that video rental giant Blockbuster Inc. is in talks to take a stake in the new Viacom-led premium TV channel venture. It said Blockbuster would get digital rights to the new channel's programming in return for an investment. Blockbuster officials weren't immediately available for comment.
The future of news anchor Katie Couric did not come up on the call, but the upfront did.
Next month's upfront presentation "will show a different kind of CBS" that includes not only the network but also the entire corporation, Moonves said. "We will be showing brand new shows at our upfront," he said. Many of them were filmed as short-length presentations not full pilots, a departure from the traditional strategy that is saving the company tens of millions of dollars, he explained.
Moonves said that shooting key scenes gave programmers an idea of the key relationships between the characters and whether the show would work. "You don't necessarily need to see a full completed pilot until you're ready to put it on the air," he said.
Moonves said that CBS will probably have more originals completed than the other networks, whose full pilots may come a little later in the development process. He also said that the "forced compressed nature" of the development season may have caused better and more intense work in the time allotted.
"We're going to have a more organized idea of what is going to be on in the fall than some people because our pilots are in decent shape. ... In addition there remains a great deal of stability in the CBS schedule without looking for a whole slew of new shows," Moonves said.
He declined specifics about the new shows to be announced.
Moonves and CFO Fred Reynolds said that CBS network CPMs were showing double digit increases in the scatter market. "We anticipate a very healthy upfront selling season," Moonves said.
Negotiations between the SAG and AMPTP are scheduled to get under way again in Los Angeles later in the day. Moonves said he was optimistic that there would be no strike when SAG's deal runs out June 30.
He said there was a consensus in Hollywood that the recently concluded writers strike "was not a good thing for a lot of people." And Moonves added: "The tone of these negotiations seem to be in a much more cordial, positive fashion without reporting anything because nobody is reporting particulars."
CBS Corp. reported a first-quarter profit of $244.3 million, a 14% increase over the year-ago period that exceeded Wall Street estimates on strength in its TV business. Revenue was essentially flat at $3.7 billion even though the same quarter last year included the Super Bowl and the NCAA semifinals. The company also raised its quarterly dividend by 8%, or 2 cents, to 27 cents per share. This was the firm's sixth such increase since its split from Viacom a little more than two years ago. Moonves told investors they should see this as a sign of management's confidence in the business despite "challenging economic times."
Reynolds admitted that recent layoffs at the company's TV station group had come amid weaker-than-expected revenue trends. But asked if he sees recessionary trends, he said: "We wouldn't say we see a recession. We see things slower."
Asked by an analyst why he is letting his two companies go at each other in the pay TV field, Viacom and CBS chairman and controlling shareholder Sumner Redstone said on Tuesday's call that he foresaw competition between the two when he decided on splitting them up.
"Competition is healthy," he said, adding he did not support Viacom and its CEO Philippe Dauman over CBS. Added Redstone: "I think Les' strategy, CBS' strategy will work for CBS, and Philippe's strategy will work for Viacom. Success for these companies is not mutually exclusive."