CBS sold 80% in Upfront; Comcast deal called win-win


What a difference a year makes. Last year CBS held back about 35% of its inventory because of soft pricing in the Upfront. That bet paid off as advertising rebounded and scatter pricing shot up double digits during the TV season.

CBS Corporation CEO Les Moonves told analysts in his quarterly conference call that times have changed. “This year demand and pricing were so strong we ended up selling about 80% — and we feel very good about our ability to improve our ratings in the year ahead. And continue growing network revenues and profits,” he said.

Analysts had lots of questions about the recently announced 10-year retransmission consent agreement with Comcast, but Moonves and CFO Joe Ianniello were careful not to reveal any secrets about the financial terms. Both insisted that the unusually long retrans deal took into account the rising value of network television content and includes escalators – just what they are is a closely guarded secret.

“We now have a dual revenue base for CBS going forward. It establishes a growing revenue stream for Showtime…from Comcast’s point of view the recognized the value of the content on CBS and Showtime,” Moonves said. So, he told the analysts, the long-term deal is good for both CBS Corporation and Comcast. Look for lots of experimentation with the giant MSO in terms of video on demand and other new ways to deliver CBS content and be paid for it.

Moonves also confirmed that CBS is seeking a portion of retrans payments, or reverse compensation, from its affiliates. “We are getting payments from our affiliates as deals come up.” But when an analyst suggest that he might play hardball by withholding important programming, such as NFL football, if an affiliate balks at sharing retrans, Moonves said that’s not his style. “We would never go so far as to say, OK you’re in Cincinnati, we’re pulling the Bengals from your marketplace. Obviously we are spending a lot of money, as you pointed out David, on our content, the NFL included, our programming, etc., etc., etc. and we feel it’s appropriate as our contracts with our affiliate stations come up that they pay us some money for that in reverse comp. We also expect our affiliated stations to be getting money, getting paid, from the MSOs and satellite companies, etc., and they should be getting paid for having that content. But, once again, we hopefully would – and so far we have successfully done that – successfully negotiated all of them as the contracts come up – to be able to make a deal that is satisfactory to both sides and we’ve been successful without any threats of pulling the plug. That’s the way we prefer to negotiate,” Moonves said.

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