“There you have it. Let the games begin,” Moonves told the Deutsche Bank Media & Telecom Conference this morning. Although he’s typically the most bullish TV exec in making these kinds of forecasts before the upfront market opens in May, his ambitious target for unit prices doesn’t seem far-fetched for CBS based on his and other executives’ recent observations about ad sales. Moonves says that demand is “exploding” in the current quarter, especially from auto makers and in local markets. Prices in the scatter market are up by mid-teen percentages vs last year’s upfront sales, he says. And with his network’s strong ratings “there are no make-goods at CBS; other networks have that issue.” He’s also salivating over the likely flood of political ads. “We expect an extraordinary year,” he says — rivaling two years ago when CBS saw $180M from various campaigns. The addition this year of Super PACS — which have been spending heavily in the GOP primaries, mostly on negative ads — will be “beneficial to us.”
His optimism about advertising is important for CBS; it accounts for about half of the company’s revenues. But Moonves wants the Street to stop looking at the company as a bet on the ad market, and start assessing it the way long-term investors including Warren Buffet do: “Our stock is a value play,” he says. Moonves’ message is that there’s little risk in betting on CBS because it’s so dominant in the growing market for mass audience programming. “We’re winning. We’re ahead by a lot,” he says. For example, next year there’s “going to be a lot of money available to us” when the company syndicates about 600 episodes of four hit shows: NCIS: LA, Hawaii Five-0, The Good Wife, and Blue Bloods. The pool of potential buyers is expanding beyond TV stations and general entertainment cable channels such as TNT, TBS, and USA. Moonves notes that A&E syndicated CSI. “That’s a new buyer in the marketplace,” he says. In addition to the conventional syndication deals, CBS’ agreement with Netflix enables the network to require that the streaming service offer certain shows once they’re off the air ”at a nice price….There’s no risk involved in that.” He expects to strike more deals with new streaming services. For example, Comcast just launched its Streampix. ”Where Comcast goes, (Time Warner Cable) probably will be there.” Moonves adds that “Apple’s had some conversations with us over the course of time.”
Moonves also says that sales of made-for-syndication shows are strong, despite the loss of Oprah Winfrey’s talk show. That mostly hurt ABC stations, the largest buyers of her show, and gave CBS the opportunity to promote sales of Judge Judy and Dr. Phil. “Not denigrating Oprah, but net-net (her departure) turned out to be not a bad thing for us,” Moonves says.
On other matters, Moonves says that CBS probably won’t create or buy a cable channel. For example, Hallmark and TV Guide Network “don’t make sense at the prices being talked about.” He also says that Showtime won’t break away from pay TV by offering consumers the opportunity to subscribe online without having to first subscribe to basic services. “We talked about it with Showtime. We decided for the moment against it. We like Showtime to be bundled….If we own the content, we will be fine.”