CBS CEO Les Moonves continued to try to squash speculation that the broadcaster needs to re-pair with its former corporate partner Viacom, telling analysts on a Q4 earnings call Thursday that it is well on track toward $2 billion in retrans and reverse compensation revenue and doesn’t need help in getting deals done.
“From Verizon to Time Warner Cable, from Cox to Dish, through all of our affiliate deals we have proven time and time again that distributors can’t live without CBS,” Moonves said. “This is true for large bundles and small, and we don’t need any other assets to get these deals done on the best possible terms. The power of our own content drives our success both in negotiations and from an operating perspective as well.”
That was a rather poorly veiled reference to speculation that CBS could increase its leverage in carriage negotiations by acquiring or being acquired by Viacom. The two companies split in 2006.
At the same time, Moonves raised the specter of the broadcaster making its top content available online, telling analysts that it has reached an agreement with an unnamed subscription VOD company to stream its non-serialized content like its popular CSI franchise. Moonves said the name of the partner will be announced later.
“We have hundreds and hundreds of episodes ready to go, so you can imagine how lucrative this will be,” Moonves said.
While CBS raised speculation about its OTT plans, Moonves tried to squash any talk about a possible reunion with Viacom, which some have said would add to the broadcaster’s clout in retrans and carriage negotiations. CBS was a pioneer in obtaining cash for retransmission consent and has said it would reach $2 billion in revenue from retrans and reverse compensation by 2020. On a conference call with analysts to discuss fourth quarter results, Moonves said that the broadcaster was well on the path to reaching that goal.
As far as carriage, Moonves said it has sufficient leverage with its National Football League programming, the No. 1 comedy in the Big Bang Theory, the No. 1 drama in NCIS and the upcoming “March Madness” NCAA Men’s Basketball Tournament.
“We feel pretty good about ourselves as a company,” Moonves said. “Our board of directors is only goig to do what’s good for the shareholders. …We’re feeling pretty strong about ourselves and don’t need any partners.”
Although CBS's stocke has slipped recently, the broadcaster solidified its retrans position in 2013 with the month-long blackout of Time Warner Cable subscribers in New York, Los Angeles and Dallas, which resulted in TWC’s sigle greatest quarterly subscriber loss. While Moonves has tried to downplay the notion that pairing with Viacom’s cable networks would strengthen its position, it would appear that Viacom, which has faltered in the ratings and has been dropped by two mid-sized cable operators, would benefit more from a union.
On a lighter note, Moonves said that CBS is considering going over-the-top with its Showtime premium channel, similar to what Home Box Office has said it would do later this year, but offered little insight to its plans.
“Obviously we are looking at Showtime and the potential for that,” Moonves said in reference to an OTT service. “There are various permutations that were working at and we’ll probably share as many details with you as HBO did, which is not many at all.”
Regarding Dish Networks’ Sling TV over the top service, Moonves said that its recently completed carriage deal with the satellite company did not include the OTT service. But Moonves said he is open to a deal.
“The out of home rights is sort of a separate negotiation,” Moonves said of any Sling TV talks. “As [Dish chairman] Charlie [Ergen] goes ahead with some of his OTT offerings, there is a path for us to discuss and they have not been done so far.”
For the quarter, CBS total revenue rose about 3% to $3.68 billion, driven by a 4% increase in advertising revenue. Operating income before depreciation and amortization for the period was down 3.7% to $778 million from $808 million in the prior year.
In the Entertainment segment, which includes the CBS broadcast network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive and CBS Films, revenue was increased 2% to $2.26 billion from $2.21 billion in the prior year. In the cable network segment, which includes Showtime, CBS Sports Network and Smithsonian Networks, revenue was up 5% to $499 million from $477 million in 2013.
Entertainment segment OIBDA plunged 31% to $287 million from $418 million in the prior year, due mainly to increased investment in programming, primarily NFL broadcasts. Cable Networks enjoyed a 24% increase in segment OIBDA to $247 million from $199 million, primarily due to reduced programming costs and the timing of premiers.
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