CBS to demand fees from cable operators

CBS is turning to cable operators for its next revenue stream. Leslie Moonves, chairman of CBS, said that after the planned split-off from Viacom his network will be in a better position to demand fees from cable operators that currently carry the CBS signal for free.

Moonves said he expects the split-off to be approved at a board of directors meeting this summer, and he made an argument for the viability of a stand-alone group of assets clustered around the CBS television network.

A central rationale for merging CBS and Viacom’s cable networks in the first place was to use the network as leverage to get favorable carriage deals for cable networks such as MTV, VH1, Comedy Central and Spike TV. But now that Viacom’s cable networks have their own strong leverage, CBS will be better off negotiating as a stand-alone company, Moonves said.

If the network becomes independent, it will be able to negotiate without MTV being part of it, he said. Furthermore, he said, cable operators should help pay for the cost of producing and acquiring programming such as the NFL, The Late Show with David Letterman and the CSI series.

Should the split go forward, CBS would be the only network not joined to a conglomerate with significant cable assets. CBS will retain Showtime.

Cable companies not having to pay for broadcast signals is a tradition held over from when cable was primarily used to deliver TV to rural areas, out of reach of broadcast antennas.

Satellite operators and now telecom companies such as Verizon Communications and SBC Communications pay fees for the use of broadcast signals, and Moonves said cable operators should too.

Other broadcast networks have expressed similar retransmission strategies, but none have been as vocal as CBS.

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