CBS CEO Says Netflix Remains "More Friend," Explains Why 'Person of Interest' Was Canceled

Leslie Moonves - Getty - 2016
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"They're declaring shows a hit that could be watched by 10 people," Leslie Moonves quips about the streaming giant, and expresses hope of a contentious presidential race.

CBS Corp. continues to see Netflix as "more friend than enemy," chairman, president and CEO Leslie Moonves said Thursday, and he also expressed hope that the race for president would stay "contentious," so that CBS can sell more political advertising.

Speaking at the Needham Emerging Technology Conference in New York in a session that was webcast, he said that "Netflix, like a number of other companies … is a great partner, and at the same time is a competitor."

He said the company has licensed mostly library product to the company. "We like doing business with them. We will continue to do business with them," he said. "We are not threatened by them." Asked if the streaming giant was a frenemy, Moonves said yes, but added Netflix was "more friend than enemy."

He said that the upcoming new Star Trek show drew interest from both Netflix and Amazon, but CBS decided to keep it for its All Access service as the company continues to make decisions on a case-by-case basis. Moonves said Star Trek could help add millions of subscribers to All Access.

Later in the session, he joked about the lack of audience data from Netflix in declining to share specific numbers concerning who's watching what on the CBS All Access and Showtime OTT services, saying he'll disclose viewership if Netflix does. "They're playing hide the weenie," he quipped. "They're declaring shows a hit that could be watched by 10 people. We don't know."

Moonves also said he liked being friends more than enemies, because "I don't like fighting, unless they are Time Warner [Cable], and they don't exist anymore." That was a reference to a carriage battle in 2013 that left CBS content off the air in the cable firm's systems for about a month, as well as a reference to Charter Communications on Wednesday having closed its acquisition of Time Warner Cable.

About the outlook for CBS' new online services, he said predictions of 4 million subs each for Showtime OTT and CBS All Access in fairly short order are "conservative."

Moonves also highlighted the increased importance of owning shows as "the international market is exploding" and domestic SVOD services have spent on license deals. All that means that companies can make “pretty tremendous” amounts of money if they own a show, he said. "The value of content is so much greater than it was before. Having ownership is a huge, huge difference, and it does effect everything we do. A show that's 100 percent owned will generally get a better time period."

He mentioned that this also affected fall TV schedule choices, as the CBS-owned Elementary was renewed, but Warner's Person of Interest was canceled.

Elementary made an about profit of $80 million last year, Moonves said, while the company broke even on Person, "because Warner Bros got all that additional revenue." Out of CBS' six new shows for fall, CBS fully owns three, 70 percent of one and 50 percent of the remaining two. He said others do the same, saying Fox and ABC only don't know one show each out of their new fall additions.

Discussing the advertising upfront, Moonves said it would be "better" than last year and would happen faster. Needham expects $10 billion in upfront sales this year, and Moonves said upfront sales would be much better than a year ago, because advertisers can get airtime now for 25 percent less than they'll pay in October.

He noted he "got in trouble" in February when he declared that presumptive GOP presidential nominee Donald Trump's campaign "may not be good for America, but it's damn good for CBS."

Overall, "we like the political race heating up, and we hope they all spend a lot of money," Moonves said Thursday at the Needham investor conference.

He predicted a record presidential year in terms of political ads sold on CBS, much of it flowing to CBS' 27 local TV stations in markets in swing states like Florida and Ohio.

Beyond talking Netflix and politics, Moonves also took a good-natured shot at cable networks groups, such as Time Warner's Turner unit, their ad loads, which some have said they would look at reducing. "Sometimes you watch a movie on Turner and it gets frustrating," he said. "You get two minutes of content and five minutes of ads. We don't do that"

South America and China are still under appreciated growth spots for CBS, he told the Wall Street analysts at the conference.

"We're finally making legitimate deals in China for legitimate dollars," he said. "It's substantial numbers for the first time. Before it would be pennies." He added, though, that the No. 1 show in China is The Big Bang Theory. "The only problem is Warner Bros., which produces the show, and CBS, which airs it, see none of that money because it's all in the open market," Moonves said. "However, now it's starting to get more legitimate."

Moonves also reminisced about CBS selling the New York Yankees for less than $10 million to George Steinbrenner in 1973 (before his time), and said CBS has no intention of buying a sports team today, though he'd like to personally to own a stake in one some day. "It's a nice toy to have," he said.