The company’s CEO says that while he believes the affiliate system is “healthy,” CBS has got contingency plans if they can’t deliver in the future. The network is also ratcheting up the financial pressure on affiliates with its reverse compensation requirements and is on track to hit $2 billion in retrans and reverse comp revenues by 2020.
EARNINGS CALL
Les Moonves: CBS Loves Its Affils, But…
CBS boss Les Moonves wants affiliates to know their financial health is important to the network.
But not so important that CBS couldn’t live without them.
Moonves’ observation came in response to the final question on today’s first-quarter financial results conference call.
When Wells Fargo analyst Marci Ryvicker noted that station groups are under pressure from the FCC and asked how important the health of the affiliate body is to CBS, here’s what Moonves said:
“The health of our affiliates is very important to us. However, we own almost 40% of country with our O&Os. I recently met with the FCC and I think by and large the FCC wants a healthy affiliate body. But if you look down road and say what if affiliates weren’t able to perform, remember almost 90% of our viewers watch us on satellite, cable” and other non-affiliate platforms.
CBS is ratcheting up the financial pressure on affiliates with its reverse compensation requirements. Moonves reiterated guidance he gave during CBS’s fourth-quarter conference call that the company expects to hit $2 billion in retrans and reverse comp revenues by 2020.
BRAND CONNECTIONS
He repeated that guidance during today’s call. Ryvicker in November 2013 reported that CBS is well on its way to $1 billion of combined retrans and reverse comp by 2017.
And, as TVNewsCheck recently reported, CBS may be using Gray Television as a test case to see how high is up when it comes to reverse comp. CBS reportedly is seeking as much as 90 cents per television household in reverse comp per television household in Gray’s CBS markets.
And in a comment concerning Aereo, Moonves further underscored the importance — or lack of it — that affiliates have for the network. While dismissing the likelihood that Aereo will convince the U.S. Supreme Court that it’s not violating broadcast copyrights, Moonves noted that CBS nevertheless is working on backup plans.
“We have deals with our MVPDs for a long, long time,” he said. “We’re talking about delivering our programming directly to the consumer and we’re talking about doing something like Aereo ourselves.”
All that said, “We don’t believe the [affiliate] system is in jeopardy,” he noted.
Comments (16)
Matthew Castonguay says:
May 9, 2014 at 8:52 am
Cable nets are 100% satellite, cable distribution…what would make CBS different from them if they dropped their affiliates? Broadcast network ratings are only partly based on distribution…they’re also based on local/national programming and promotional synergies. When network people say stuff like this, I’m never sure if it’s because they’re oblivious to this, or they’re just yanking local TV’s chain. Maybe a little of both.
none none says:
May 9, 2014 at 9:07 am
So when it comes to the affiliate/network relationship, I guess LES is more.
Gregg Palermo says:
May 9, 2014 at 9:26 am
Broadcast is so twentieth century. Yes, I’m a broken record on this point, but stations are not the future. If I was kind, I would shut down all but two stations per market, just for emergencies (one would be PBS and the other would be permitted to schedule the “best of” whatever networks remain). The reclaimed spectrum could be leased five years at a time to the cellular business. Phones (and radio) need wireless. TV does not.
Keith ONeal says:
May 9, 2014 at 3:06 pm
The FCC already reclaimed channels 70-83 years ago and channels 52-69 when the full power stations went digital; we don’t need to lose channels 32-51 as well! The FCC needs to CANCEL this stupid spectrum auction! BTW, I believe that network threats to leave Broadcast and go to Cable/Satellite if Aereo wins in the U.S. Supreme Court are just people flapping their gums. The nets will stay on Broadcast TV.
Gregg Palermo says:
May 9, 2014 at 9:26 am
*king
Rebecca Petit says:
May 9, 2014 at 9:45 am
the networks have a wonderful track record of good decision making.
Keith ONeal says:
May 9, 2014 at 3:07 pm
Are you referring to their programs or their politics?
Jay Miller says:
May 9, 2014 at 10:00 am
Hey Rustbelt Alumnus.. you obviously never worked in a successful station and my guess are a 60 something ex cable guy..What a joke…Keep your dumb comments to yourself!!!
Julien Devereux says:
May 9, 2014 at 10:19 am
“… remember almost 90% of our viewers watch us on satellite, cable” and other non-affiliate platforms.” So the other 10+ percent are irrelevant? You’d just blow off on tenth of your viewers and ratings? Really, Les?
matt fess says:
May 9, 2014 at 10:52 am
CBS This morning is a joke. Daytime is a joke. Nightly news is a joke. Late night is a joke. Prime is OK, but let me tell you, you take all the wrap around of the local news, weather and sports content both on air and in the digital world which is growing and getting better and better every year, as well as all the local syndication, CBS would take a major nose dive and their value would drop substantially. Don’t be fooled, the networks need strong affiliates and the affiliates strong networks. It is a great marriage if we stop playing games with each other. United we stand strong, divided everyone loses.
Keith ONeal says:
May 9, 2014 at 3:17 pm
I agree about “CBS This Morning.” Have NEVER watched it; don’t intend to. “The Early Show” was way better! Daytime is OK; I watch the Game Shows, but not the Soaps. I watch the “CBS Evening News.” I agree about Late Night, especially LETTERMAN!!!
Robert Crookham says:
May 10, 2014 at 6:29 pm
I don’t think either one of you actually watch “CBS This Morning”. It’s a solid NEWS broadcast, compared to the dribble that NBC and ABC call “morning shows”. If you want something soft in the morning, have a bowl of oatmeal.
Roxanne Tedeschi says:
May 9, 2014 at 10:57 am
An average of 18% of television viewers watch TV Over-the-Air(OTA) using rabbit ears or outdoor antennas.
Hey man don’t forget when you get out of the big cities, there is a lot of open spaces between homes and places to watch TV. Wait till there is a BIG Disaster and see how many people rely on their TV for information.
I think Broadcast TV is more a LOCAL service than at any time in the past. Wake up people. It is not all about greedy money to programmers.
pearl servat says:
May 9, 2014 at 5:39 pm
The erosion of the network affilliate relationship began when then CBS President Larry Tish told the affiliates he didn’t think they deserved any compensation back for using the local spectrum of a station to play network commercials on. At that point many smaller markets relied on those payments to be able to deliver local news to their markets and personally serve local public service agencies, community events and local businesses. Now Moonves has taken the networks insatiable appetite for even more profit to a new hyper greedy level. The FCC’s allowing nets to own up to 40% of the nations households has played into this plan in ways that cannot likely be reversed. The local markets, especially smaller and rural markets are the losers. Already you see duopolies in those markets just for owners to survive at any level. TV is going the way of local radio. The people are the big losers,.. unless of course they have network stock.
Joanne McDonald says:
May 9, 2014 at 6:18 pm
Leslie Moonves idea with CBS likely will harm broadcasters such as Brian W Brady and likely would end up seeing him selling KSWT (NBC KYMA being including) thrpugh Blackhawk and KVTV through ragle Creek to other broadcasters like Nexstar with Nexstar could be a target for KZTV from Sagamore Hill and Mark Nalbone could end up possibly selling KGWC/KGWL/KGWR in Casper to Gray to connected it with NBC affiliate KCWY in Casper and KGWN in Cheyenne due to Gray ownership of KCWY and KGWN and Gray has the resources when it comes to CBS wanting 90 cents. Gray has actually done the best job with CBS stations than Brian W Brady, Mark Nalbone, Sagamore Hill, and other bad broadcasters combined while Nexstar and Sinclair wouldn’t have problems with CBS due to them operating large number of stations with CBS and would have no trobule coughing up 90 cents per MVPD subscriber per month. Brian W Brady is responsible for wanting FOX affiliates to pay 25 cents per subscribers the first year to 50 cents the fourth year with the possibly for him selling his Northwest/Stainless stations to possibly Sinclair in the future mainly as consolidation and virtual duopoly bait.
Wagner Pereira says:
May 10, 2014 at 2:11 am
Put down the bottle!