CBS Retrans Revenues to Surpass $100 Million in 2010
SAN FRANCISCO: CBS expects to rake in $100 million in retrans
revenue this year, thanks in part to its own deals, and contributions from its
“Retrans is paid on our owned-and-operated stations, but we are also sharing in
the retrans that our affiliates have, a certain amount,” said CBS chief Les
Moonves this week at the Morgan Stanley Technology, Media and Telecom
Conference at the Palace Hotel in San Francisco.
Moonves said the network’s revenues remain primarily ad-based, but that could
change in a few years, with retrans playing a big part.
“Currently 65 percent of our revenue is advertising based, and for the near future,
that will probably continue, but if you look down the road, there are a lot of
new revenue sources that are coming into play that are becoming much more
substantial,” Moonves said. “In 2010, we’re going to take in more than $100
million in retrans fees. That number will grow in 2012 to at least $250
million, which is clearly non-advertising based.”
The 14 owned-and-operated CBS TV stations took in $358.2 million for the fourth
quarter of 2009, and $1.14 billion for the full year. One of the key benefits
of retrans revenue is 100 percent flow-through, with no cost associated.
Moonves was asked about how the retrans dynamic came about.
“So it has evolved over the course of the last three or four years, and most
visibly by the Fox-Time Warner dispute, that the networks said wait a minute,
this is wrong. If a USA is getting 50 cents a sub, what should a network get
that’s delivering the Super Bowl, the NCAA Tournament, ‘American Idol’ over at
Fox, hit shows across the board,” he said. “We used to joke, USA, which is a
wonderful network, is getting paid for showing ‘NCIS’ repeats and we’re not
getting paid for showing the original product.
“The game has now changed. Fox is getting paid by Time Warner. We’re getting
paid by Time Warner. We recently concluded a deal with Cablevision, we have a
deal with Dish, we have a deal with Verizon, we have a deal with AT&T, to get
paid a second revenue stream.
“So no longer can it be that network is doomed, because they only have single
revenue stream, while cable is a better business because they have a duel
revenue stream. Because we have a dual revenue stream as well... I think it’s
now a given that retrans is part of the game.”
It’s not the only part, however. Multiplatform revenues are also a factor in
the emerging revenue diversification strategy, the network chief said.
“When you look back at what CBS, we used to sell our product one way--by advertising
over the air. Now there are 12 or 14 revenue streams from the same piece of
content, which is great for us, because when you can monetize a hit show like a
‘CSI’ or an ‘NCIS’... not only on network but in domestic syndication,
international syndication, as well as all the ways we’re now selling it online.
So we’re getting multiple revenue streams for the same product... something
that’s changed drastically from five, six years ago.”
Moonves, whose contract was recently extended through February, 2015, talked
about how the Internet was expected to “eat up network television. Instead, we
found the opposite.... we’ve seen such a phenomenal year in live television.
The Super Bowl was the highest rated program ever,” he said.
“The Olympic Games, up almost 20 percent. Golden Globes up a lot; Grammys
almost 36 percent. So I find that no matter how many means there are to get
your entertainment, there’s still great value in the shared, water-cooler
experience,” he said. “We view the Internet as being a real positive. Social
network that has gone in those events; when you look at the amount of tweeting
going on during the Grammys, it is a phenomenal experience. The same way with
the Super Bowl. They’re sharing the experience with their friends.
“If you are smart about using the Internet properly... as long as we’re getting
paid and we’re getting paid, and we’re able to control our content in that way,
it’s going to be a real positive for us.”
CBS is the top-rated network on TV, and as such, the company guards its content
zealously. While many other network affiliates multicast, for example, CBS
stations generally don’t in order to transmit true, hi-def video. The Eye
Network is also uninterested in providing content for mobile DTV without some
detailed and reliable form of measurement. (See
“CBS Won’t Pony Up
for Unmeasured Mobile DTV”) And similarly to tapping into affiliate
retrans, the network will likely seek rights fees from non-owned affiliates
that do launch mobile DTV. (See “Who Owns Mobile DTV
CBS owns about two-thirds of the content on its schedule.
-- Deborah D. McAdams