The CBS CEO says if the FCC relaxes the ownership caps, he’s interested in buying. He sees retrans revenue hitting “few hundred million dollars” in three to four years.
Despite the sluggish growth of TV broadcasting in general, CBS has no intentions of selling any of its TV stations and, in fact, it wants to buy some more if ownership caps were relaxed, CBS CEO Les Moonves said at a PricewaterhouseCoopers conference in New York this morning.
“We love the TV station business,” Moonves said. “These are not businesses that are going to grow double-digits anytime soon. Yet, they provide us with a lot of cash. At the moment we are at the maximum the FCC will allow. If these rules are relaxed, we would look to continue to be in the television station business in a big way.”
He continued: “We like [owning stations] as part of our networks. It provides great opportunity for us. In a year like this—a political year—we do exceedingly well. Next year we have the Super Bowl. Our stations will do exceedingly well with that. We like the TV station business and hope they relax the rules.”
Moonves called the broadcast network upfront “successful,” saying three of the four major networks were able to boost their rates. CBS was able to hike its rates in the “low single digits” and increase the amount of inventory it sold.
The rates of CBS’s half-owned new network, CW, were flat to slightly up compared to those of the WB, one of its predecessor networks and CW’s volume was the same as that of the WB.
Another reason Moonves likes the TV station business is his belief that it will soon start generating major revenue from retransmission content. The deal it cut with Verizon earlier this year was “just the tip of the iceberg,” he said. CBS will get 50 cents per subscriber per month from 1.3 million Verizon video homes. That deal will yield $6.5 million in the first year, he said, and will double in the second year. “We are going to get paid—and the number could be as high as a few hundred million dollars within three or four years. Once again, our mantra: Getting paid in new ways for exactly what we are doing today.”
Moonves said that Disney is already getting paid by cable operators for ABC. When cable operators pay $2.50 per sub per month for ESPN they’re really paying $2 for ESPN and 50 cents for ABC.
A Verizon executive who appeared later at the conference said that the telco is not paying directly for retrans consent as Moonves suggested. “I don’t recognize any of the numbers he is talking about,” said Marilyn O’Connell, Verizon senior vice president, video solutions. The agreement that Verizon struck with CBS has many parts, including offering network shows on a VOD basis, she said. Retransmission consent is only part of the deal, she added. “People can tell the story how they want to tell it.”
Moonves confirmed reports that CBS is considering producing theatrical films. Because of Showtime and its other distribution outlets, he said, CBS could produce six to eight films a year “literally without risk.” Plus, he added, CBS has the ability to promote films at a discount through its radio and TV stations and its outdoor advertising arm.
Moonves said CBS is not interested in big-budget films. It would look at projects in the $20 million-$50 million range like those that dominated the Academy Awards this year.
Going from producing primetime TV to theatrical films is not a big leap, he said. “We know how to do this.”