Having been briefed in advance, CBS affiliates seem enthusiastic about the network’s online video service and interested in participating — if the terms are right. Said Nexstar CEO Perry Sook: “CBS will handle all the billing and affiliates will get a piece of the revenue this generates in market. It demonstrates the power of the network-affiliate model.”
CBS affiliates are reacting to the network’s announcement today of the CBS All Access streaming service with strong interest and guarded optimism.
Prior to today’s announcement and launch of the service to CBS O&Os, the network sketched out plans yesterday in New York to the affiliate board and affiliate owners.
“I think the mood of the group was very interested for sure,” said Chris Cornelius, immediate past chairman of the CBS affiliates board. CBS “has what appears to be very well thought out plan that appears to be inclusive of affiliates.”
Live-streaming of linear channels, O&Os and affiliates alike, is the key component of the service.
The key differentiator for CBS All Access, which costs $5.99 a month, is that it does not require a subscription to a pay television service as TV Everywhere services do. CBS has contracted with Syncbak to provide geolocation technology that enables subscribers to view in-market stations. (For more on Syncbak and the technology involved, click here.)
TV Everywhere (TVE) — the generic term for the streaming of cable networks and TV stations so that they can be received by authenticated cable subscribers on their mobile devices — has been slow to manifest, in part because of the legal issues surrounding obtaining rights to syndicated and sports programming.
So far, ABC live streams all of its O&Os, and Fox some of its O&Os. NBC thus far is not streaming its O&Os.
Raycom Media begin live-streaming of four of its stations in January, according to Jeff Rosser, VP-television and chairman of the Fox affiliates board. That service would fall under the TV Everywhere banner and thus require viewers be cable subscribers.
Meanwhile, ABC, Fox, NBC and the CW offer subscription video on demand of programming, with a one-day delay, to authenticated pay TV subscribers via Hulu, an OTT provider, for $7.99 a month.
The CBS service is aimed primarily at cable cord cutters, “cable nevers” and CBS “super fans,” Cornelius and others said.
“I think it’s a net positive,” said Perry Sook, president-CEO of Nexstar, adding that, “It’s hugely positive as opposed to Hulu, where the networks participating there don’t share any revenue with affiliates.”
While observing that the “devil’s in the details” regarding the economics, “CBS will handle all the billing and affiliates will get a piece of the revenue this generates in market,” Sook said. “It demonstrates the power of the network-affiliate model.”
CBS’s strength as the top-rated network is due in part to its NFL contract, which gives it substantial clout with advertisers and affiliates. But NFL games are not part of the CBS All Access service. Currently, the NFL contracts with Verizon to provide live-streaming of games to smart phones. “At some point in future, we hope NFL would be part of this,” Cornelius said.
While CBS All Access launches today for O&Os, discussions currently are underway with affiliates for their participation in the service, said Dana McClintock, CBS spokesman.
Live-streaming of affiliatea could come as soon as the economics and technical details are worked out. “I don’t know if it is days, weeks, months,” McClintock said. “I just don’t know. For some stations, it will be very soon.”
Sharing a portion of the subscriber fees provides an economic incentive for affiliates to participate, Cornelius said, noting that they’re not required to.
“In my opinion it’s a positive step in the right direction and furthers a partnership some have called into question between affiliates and the network,” he said. “It’s an interesting and compelling partnership, a new option that breathes new life into broadcast values.”
The network-affiliate model has come under increasing pressure over the last several years as networks demand an increasing chunk of affiliates’ retrans revenues. That, in turn, has led to more rancorous negotiations between affiliates and MPVDs over retrans fees.
“I think [CBS] has done a terrific job in thinking this through so they don’t make mistakes,” Cornelius said. “I don’t think it’s going to be a day-one, blow-off-the-doors success. But I think this particular model puts some distance between them and the other networks.”