Pickets left cash in CBS' pockets

Moonves: Strike saved $70 mil in Q4, fueled changes

Declaring that "pilots are vastly overrated," CBS Corp. CEO Leslie Moonves said the writers strike has given the network the opportunity to save millions and revamp its development process.

CBS wasn't hurt financially by the 100-day strike, he added. It ended in time for the network to return to original programming in the spring, he said, and the company isn't seeing any sign of recession.

Speaking with Wall Street analysts during CBS' quarterly earnings call Tuesday, Moonves reached into his 20-plus years as a successful network programmer to say that there has been a lot of wasted spending.

"It hasn't necessarily been the most expensive shows that have hit it out of the ballpark," Moonves said. "There's some feeling that you don't have to spend $5 million" on a pilot to know whether the show will be a success. He said that the 20th episode of a series is a better indication than the first.

"I don't think you need to spend a huge amount of money to find those hits," Moonves said. He said the network will operate more efficiently, with the changes being put into place now.

CBS saved about $70 million in the fourth quarter thanks to the strike, Moonves and CFO Fred Reynolds said. There will be "significant" savings in the first quarter.

"During the short term, we were able to manage operating costs at the network very well," Moonves said. That included significant reductions in operating expenses as well as terminating what Moonves called "costly" writing and producing deals. The network does not have any make-good issues either, and scatter pricing is running about 30% more than what the network received in the upfront.

Moonves looked forward to the upfront, which will tout CBS' new schedule on air and online. He said that the network will benefit from a "faster, leaner development model" with fewer expensive pilots and greater efficiencies. Eleven shows already have been renewed.

One of the growing revenue streams is online coverage of the NCAA men's basketball tournament in March. Moonves said the online product, which has been free for the past three years, delivered $10 million in revenue last year, and CBS is projecting it will take in $21 million this year with exactly the same cost of production.

"The great majority of that $21 million will drop to the bottom line," Moonves said.