We get more color from Wells Fargo on CBS Corporation for its streaming service subscribers and other underlying trends. There were more than a few surprises when the Tiffany network unveiled its second quarter numbers.
Wells Fargo Analyst writes “we were shocked” by the 2 million All Access/Showtime Over-The-Top subscriber figure, especially relative to the 1 million subs for HBO Now and 765 Sling subs. For CBS, the demo skews to females in their 40s and the subs are not bundled, meaning CBS All Access and Showtime OTT are sold separately.
“Perhaps the biggest positive surprise was the 2 million CBS All Access/Showtime OTT subscriber number, which was finally disclosed and much higher than we think anyone had been expecting,” according to Ryvicker. Management mentioned potential catalysts like the international branding of Showtime, the CW’s SVOD (subscription video-on-demand) deal with Netflix, an international Star Trek deal with Bell Media in Canada, and the upcoming primetime season (CBS has 6 shows – all of which they own in part).
“CBS All Access sort of markets itself – via the CBS network, which is available to 98% of the country,” writes Ryvicker in a client note. Showtime OTT’s success stems from the fact that fewer people tend to choose this network linearly. The incremental margins are quite high – especially for Showtime where CBS does not share the affiliate fee with pay-tv distributors.
The subs seem to be coming from broadband-only homes, so they’re not cannibalistic to retrans.
Speaking of retransmission consent fees, the Charter-Time Warner Cable should not impact those for CBS; The broadcaster’s deal with Charter comes up for renewal next year.