CBS Corp. still expects to launch a Showtime over-the-top, or online-only, service next year, but in cooperation with its pay TV partners, CEO Leslie Moonves emphasized at the RBC Capital Markets 2014 Technology, Internet, Media and Telecommunications Conference in New York on Monday.
Speaking during a session that was webcast, he was asked about his previous comments on the plans, which came after recent news of an upcoming HBO online-only service, highlighting that the approach will be to a cooperative one with pay TV companies.
Asked about a planned Sony virtual pay TV service that CBS has struck a content deal with, Moonves provided some rare color on Monday without sharing full details. “Sony is the next iteration of FiOS,” he said, adding that the planned service has “more bells and whistles” and more episodes of TV shows available via VOD than other services. But he didn’t provide more specifics.
Moonves also addressed current carriage fee talks with Dish Network, led by chairman Charlie Ergen, with the current carriage deal expiring at the end of the month. He pointed out that the importance of NFL games airing on CBS helped get a Time Warner Cable carriage deal done earlier this year just before the start of the NFL season. “That gives us a lot of clout,” he said.
“As I said to Charlie Ergen … ‘Your people won’t be very happy with the Denver Broncos not on the air [on] Sunday,’ ” Moonves said (Dish is based in Colorado), adding, “There would be a lot of heat for not having CBS programs on.”
Last week, Moonves had said about the Dish talks: “The end of our current deal is approaching soon, and we’re determined to get paid fair value for our programming. As you know by now, we know how to get this done, and rest assured, we will.”
Dish and Time Warner’s Turner have been trying to extend a carriage deal, with the former recently dropping CNN and some other networks. Ergen on his earnings call said the loss of the Turner networks were a “nonevent” for Dish subscribers, a comment Turner boss John Martin took issue with later. “I know Charlie had some disparaging things to say about CNN,” Moonves said last week. “I don’t think he could say the same about CBS.”
The issue of market power came up again Thursday. “We have plenty of power in the marketplace,” Moonves said at the RBC conference when asked how he feels about the company’s overall clout compared to pay TV giants, which have been consolidating. “They will be stronger, they will be tougher. Having said that, as long as I continue to do what I do, which is put on the kind of programming we put on, both in drama and obviously with the NFL, you can’t live without CBS.”
He concluded that “we still have a strong hand at the table” and the company’s leadership team doesn’t “find it necessary to go out and get bigger. We are very happy with who we are today.”
Discussing OTT, or online-only plans, he said: “It’s no secret … that more and more of our viewership is going online. There are many more people who are cord-cutters or cord-nevers,” and there are fewer TV sets on college campuses. CBS feels it needs to give them a live stream, catch-up episodes and library product, such as via its recently launched All-Access service, he said.
Right now, 77 percent of the CBS audience watches live, but “that number is going to get less and less,” Moonves said, adding that the biggest growth is in streaming. “We need to be there,” Moonves said. “We are a content company first and foremost. Our job is to make our content available to anyone anytime, and get paid for it, and we have begun to do that.”
Why did the CBS All-Access online-only service get a launch before a Showtime OTT service? “It was an easier proposition to do,” Moonves said, highlighting that CBS owns more of its content. The Showtime OTT service will be done through “our current partnerships,” direct to consumer, but via existing partners, he said.
Discussing carriage fee trends, Moonves said viewers pay for a lot of channels they don’t want. “I want [fee] raises because people are watching our network,” he said before joking: “You shouldn’t be paying the Karate Channel 15 cents a month if no one is watching it.”
Discussing how CBS monetizes shows, Moonves pointed to new series Scorpion, which had an opening night audience of 13 million, with seven days of delayed viewing adding another 5 million and a month of streaming adding 8 million more.
Said Moonves: “13 million is now really 26 million.” Of that, 18 million viewers are counted by Nielsen, with the rest netting CBS more money since “we get paid via streaming,” Moonves said.
Asked about the success of the CBS Thursday night NFL game this season and his interest in extending the deal, Moonves said “ratings weren’t quite as high as we would have predicted” due to some blow-out games, but the more competitive games did better. He said on weekends, people stay with blowouts more, while during the week, they go to bed.
“It’s a great thing to have football twice a week,” which also helps promote other shows, Moonves concluded. Overall, he said he was “very pleased” and was interested in extending the deal.
Discussing advertising trends, Moonves said political ad spending was slow this election season and came in “slower than we had anticipated.” but ended up “very close to where we wanted to be” thanks to strong spending during the last week when “all this money came in,” including PAC and dark money. He said Denver and New York were particularly strong, with Denver seeing political ads wall-to-wall in the final week. Trends were weaker in California, which had few heated races, he said.
Moonves also said that summer ad trends were “a little bit slower than anyone wanted,” with momentum picking up “a little bit later than normal. But current scatter market prices remain above upfront levels, with demand appearing to pick up. Said Moonves: “Now, it is starting to come in like it normally does.”
While some observers have suggested that marketers have started spending more on digital media than TV, Moonves said “there was [some] caution,” but “we think digital came out of print and niche cable” networks, while broadcast TV is still “the big tent.”