Moonves: Web revenue to double
Ads key for CBS, chief says at confab; Karmazin defends SternThe CBS network has sold about 70% of its Super Bowl advertising inventory, CBS Corp. president and CEO Leslie Moonves said Wednesday, predicting that this year his firm will at least double its online ad revenue from making NCAA baseketball games available on the Web, up from last year's figure of $4.5 million.
Speaking at the annual Citigroup Entertainment, Media and Telecommunications Conference in Las Vegas, Moon-ves further signaled that the CBS Radio unit is looking at using digital technology to make more money from its content. "We are looking at time shifting" and other possibilities with potential outside partners "to monetize content," he said without providing specifics.
Overall, CBS Corp. expects to make the "bulk" of its online money from advertising, Moonves said, adding that iTunes revenue amounted to less than $10 million last year.
Asked about CBS Corp.'s expected low-key move into the film space, Moonves said it is "not entirely risk-free." But he said that "the upside is far greater than the risk. A bad movie would lose us (only) a few million dollars."
He didn't provide any additional updates on the likely start or possible outside financing partners of the film effort, but observers expect it will launch this year.
Moonves also told the Citigroup crowd that CBS' TV stations had a "phenomenal" 2006 thanks in large part to strong political ad trends. However, "momentum continued through year's end and into the (new year)," he told investors.
Moonves also said CBS is in retransmission-consent talks with three smaller distributors, with big deals coming in 2009 and 2010. He didn't provide further details beyond saying that the company is looking for 50 cents-plus per subscriber in fees in the talks. Verizon's FiOS TV video service struck a CBS deal at these terms last year.
Also at the Citigroup gathering Wednesday, Sirius Satellite Radio CEO Mel Karmazin again faced questions about a potential merger with competitor XM Satellite Radio and the costs of a content deal with Howard Stern. He also predicted that Sirius would make $60 million-plus in advertising revenue this year.
Consolidation is one way of creating shareholder value, "especially in a fragmented industry like radio," Karmazin said, adding that "synergies are to be found."
However, signaling that a deal was not imminent, he said Sirius would look at a transaction if it is in the best interest of shareholders.
The CEO called Sirius' deal with Stern "very expensive" but also "very profitable, very successful," and he said that even though he wasn't at the firm when it was struck, "I would have done the deal as well."
A day earlier, the company announced an $83 million stock bonus for Stern for helping Sirius exceed year-end 2006 user expectations. Karmazin said that Wall Street consensus estimates at the time Stern was hired predicted Sirius would have 3.5 million subscribers at the end of 2006 rather than more than 6 million.
"But we also have $300 million more revenue than forecast, and I think a big catalyst for it was Howard Stern," the CEO said.
While he wouldn't detail further bonus opportunities for Stern about what he said are another four years on his contract, Karmazin said it would all be worth it. "In radio, there is no better content than Howard Stern," he said.
On the ad front, Karmazin said Sirius has predicted it would make $30 million in 2006 and "more than double" that in 2007. "Growth has been phenomenal," he said, adding Stern and the recent addition of NASCAR have been key growth drivers.
Asked about a possible price hike this year from the $12.95 a month Sirius currently charges, Karmazin reiterated previous comments that "there is elasticity" in the price given high subscriber satisfaction with the product, low churn and higher fees in Canada. Although no price increase is imminent, it is "a good option," he said.
Also at the Citigroup conference, Charter Communications president and CEO Neil Smit signaled that he feels no major urge to sell his company's cable systems in Los Angeles and Fort Worth, Texas, to Time Warner Cable as some have suggested to reduce Charter's industry-leading debt load.
"I don't think selling assets is going to solve our balance sheet," he said, adding that Charter has enough liquidity to make it through this year. But better clustering of systems is a priority for his team, he said.
Smit predicted a pickup in talks among cable operators about asset swaps now that the sale of Adelphia Communications has been completed.