CBS CEO Les Moonves reiterated his plans to obtain cash for retransmission consent from cable operators at an industry conference Tuesday, estimating that it could be as large as a $100 million-$150 million business for the company.
That money won’t come soon, however. Moonves noted that most of CBS’ retrans deals with operators don’t expire until after 2008.
But he insisted that CBS will get cash from operators, despite operators’ claims that they will never pay cash for broadcast networks.
“When you look at the ABC television network right now,” Moonves said, “the cable operators say they’re not paying ABC any money, but they’re giving ESPN $2.50 per sub [subscriber, per month]. What I say to that is bunk. They’re paying $2 for ESPN and they’re paying 50 cents for ABC, and [Disney CEO] Bob Iger doesn’t care where he gets the money or what you want to call it, he just wants the money.”
He continued, “We were part of a similar system when we were part of MTV -- we would negotiate en masse for MTV, Nickelodeon, BET and CBS. Now that we are a free-standing network, we will get paid directly from the cable systems.”
Moonves said CBS has already reached cash-for-retrans deals with smaller cable operators. Deals with larger operators roll off from 2008-10.
“We look at that as a great revenue model, north of $100 million-$150 million perhaps in 2010 [from retrans],” he added. “We think this is a no-brainer.”
Moonves also reiterated his desire to create a film-production business for CBS, particularly to create content for its Showtime premium-cable channel. Showtime, Moonves said, pays as much as $15 million-$20 million per movie for rights to air the content on the channel. That, he added, is way too high.
Moonves said the movie-production unit would be a joint venture with another studio or filmmaker and would be nearly risk-free for CBS. He added that the company would likely put up about $10 million-$15 million per movie to the venture, which could become reality next year, and having that additional evergreen content would only have upside for CBS.
“We could do these movies, own them and not be at risk one iota,” Moonves said. “At the end of four or five years, if we have 25 or 30 pictures, that might be a nice library to have. I would highly doubt that we would acquire any film studio. It’s a good way to build it and, as long as you keep the infrastructure rather small, you could do it successfully.”