EARNINGS CALL

Moonves: CBS Retrans Rev. To Double By ’13

Leslie Moonves, CBS president-CEO, tells analysts that the company's retrans money should hit $250 million in two years. But he didn't say how much it expects to get from its affiliates in reverse compensation.

Amid impressive fourth-quarter and full-year 2010 financial performance that underscores the strength of the recovery in the broadcast television sector, CBS Corp. executives set the stage for what could be heated negotiations with affiliates over reverse compensation.

“The rapid growth of retrans continues to diversify our revenue base,” said Leslie Moonves, CBS president-CEO, during Wednesday’s financial results conference call. “We beat our year-end target of $100 million by a nice margin.” And, he added, “We’re growing retrans and affiliate compensation at a very healthy rate.”

The $100 million retrans target represents only about 0.7% of overall 2010 revenue of $14.06 billion for CBS’s multimedia empire.

The kicker is that Moonves expects retrans alone — not counting reverse compensation from affiliates — to more than double to $250 million by the end of 2012.

What he didn’t provide were projections for 2011 and how much reverse compensation will contribute. The latter typically comes in the form of the network taking some percentage of affiliates’ retransmission dollars.

While reverse compensation can come in the form of barter or other non-cash exchanges, it’s the money that typically does the talking.

BRAND CONNECTIONS

TVNewsCheck’s recent disclosure of Fox’s push for an increasingly bigger chunk of affiliates’ retrans dollars highlights the issue’s prominence.

In addition, the FCC has added retrans to the agenda for its March meeting. It’s unclear whether the agency will seek to tweak the retrans-reverse compensation process by imposing new rules.

With advertising dollars increasingly susceptible to the whims of the economy and political climate, broadcasters are finding retrans revenues a steady if modest way to dampen revenue swings.

CBS has given no clear sign on whether it will pursue tough negotiating tactics similar to Fox’s, but as the top-rated broadcast network with a stable of cable nets, it has substantial leverage going into such talks.

The company’s optimistic about this year’s first quarter, noting that while ad pacings are flat, scatter market pricing is a “robust” 40% above the upfront market — a good sign for upfront, Moonves noted.

Upfront “is going to be pretty good,” he said in response to a request for projections. “But the sales department gets mad when I predict numbers in May, so I’m not going to do it in February.”


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Brian Bussey says:

February 22, 2011 at 5:17 pm

Dont get too hooked on the re trans money Les baby. There is a extremely simple solution for the cable operators and once they figure it out, This money will shink to pennies and there nothing you will be able to do about it. Keep on living the dream big boy.


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