No losing sleep over Showtime

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CBS Corp.'s Showtime Networks "will not miss a single beat" and has "significant potential for further growth" despite the pay TV arm's impending loss of movie output deals with Paramount, MGM and Lionsgate, CBS president and CEO Leslie Moonves said Tuesday.

During a call to discuss better-than-expected first-quarter earnings that showed the company has performed solidly amid growing U.S. economic woes, Moonves told investors that Showtime had strong momentum with 1.3 million new subscribers during the past 12 months.

He said the decision by Viacom property Paramount, MGM and Lionsgate to create a premium TV channel will "free up $300 million" for Showtime that it will reinvest in more original programming, its own movies and the select "licensing of compelling new films at more favorable terms." The big studios are tied up in output deals with other pay TV giants, but Moonves said Showtime has talked to other suppliers.

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."

Asked why he is letting his companies go at each other in the pay TV field, Viacom and CBS chairman and controlling shareholder Sumner Redstone said that "competition is healthy."

He added that he does not support Viacom and its CEO Philippe Dauman over CBS when it comes to pay TV. "I support both," he said.

The Wall Street Journal reported that Blockbuster is in talks to take a stake in the new Viacom-led premium TV channel venture and would get digital rights to the new channel's programming in return for an investment.

"We are exploring a lot of options as we transform Blockbuster," a Blockbuster spokeswoman said.

CBS Corp. on Tuesday 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."

Some observers have wondered whether Moonves is losing his touch amid various challenges for CBS, but Redstone strongly expressed his support. "Let me make one thing clear: There is no one — no one — that I would rather have at the CBS helm than Les," said Redstone, who has a history of jettisoning top execs.

CBS Corp. CFO Fred Reynolds said recent layoffs in the TV station group had come amid weaker-than-expected revenue trends. The company took a $44.9 million charge for layoffs and restructurings in TV and radio. But asked if he sees recessionary trends, he said: "We wouldn't say we see a recession. We see things slower."

The future of news anchor Katie Couric did not come up on the CBS 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. But many of them were filmed as short-length presentations and not full pilots, a strategy that is saving the company tens of millions of dollars.

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 probably will have more originals completed than the other networks, whose full pilots might come a little later in the development process. He also said that the "forced compressed nature" of this development season might have caused better and more intense work in the time allotted. (partialdiff)
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