CBS Corp. CEO Les Moonves today confirmed longtime speculation that CBS would be interested in buying Sony Corp.’s movie and television studio businesses if they were to become available. “We love our current portfolio, but as a content company, we would want to look at them,” Moonves told the Wall Street Journal in an interview. Moonves emphasized that CBS has no specific plans regarding Sony right now. Some observers have speculated Sony would sell its movie and TV studio businesses if the opportunity arose. Moonves’ remarks to the Journal came as his new extended compensation package — which includes an extra $14.5 million in stock on top of other stock and salary — were filed with the the Securities & Exchange Commission.
The TV community knows that CBS Corp President and CEO Les Moonves wants to broadcast the Golden Globes. But a judge this summer ruled that the Globes broadcast rights are controlled by Dick Clark Productions …
“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.”
It looks like CBS CEO Les Moonves now won’t have to testify when the Golden Globes TV rights trial resumes Tuesday. Attorneys for both sides worked out an agreement over the weekend that Moonves’ videotaped deposition should suffice. If Judge A. Howard Matz agrees as expected, testimony from other witnesses will continue in the non-jury trial that began July 24th. Matz also agreed late Friday that Dick Clark would not have to testify beyond his videotaped deposition. Moonves has become a pivotal figure in the Hollywood Foreign Press Association’s lawsuit against Dick Clark Productions over Who controls TV rights to Golden Globes. The CBS CEO’s name came up multiple times during testimony last week concerning whether CBS was interested in bidding against NBC for rights to air the ceremony.
When CBS chief Les Moonves appears at an investor event like this week’s UBS Annual Global Media and Communications Conference, they should just get him an orchestra and a spotlight so he can sing “Everything’s Coming Up Roses.” “Everybody calls me a cheerleader but network television’s doing better than it’s done in many years,” he told analysts today. He says that CBS’ prices for ads in the scatter market are up “in the mid-teens” over the upfront, although “our competitors are doing not as well.” Heading into the holiday season ”demand is picking up again” and few are cancelling upfront orders for early 2012. “When you look at where our ratings are, you don’t want to cancel a CBS show because (later on) you’ll pay more.” To underscore his confidence in CBS’ finances, he threw some red meat to investors: ”Could we raise the dividend (next year)? That’s a possibility.”
He’s encouraged by the additional dollars flowing to the network from retransmission consent deals with pay TV distributors, and reverse compensation payments to CBS from its affiliates. If a local station balked at shelling out cash to CBS — which used to pay stations to carry its shows — then Moonves would consider yanking the affiliation agreement. But he says that’s unlikely because CBS’ strong primetime line up ”is making them a lot of money” by delivering large audiences to local newscasts. Meanwhile, he’d like the FCC not to require that network programming remain on pay TV when distributors balk at retransmission consent payments. ”This is America. We’ll make a deal with these guys or won’t make a deal.”
CBS Corp. President and CEO Leslie Moonves this afternoon addressed what went down with Charlie Sheen on the CBS hit Two and a Half Men earlier this year by issuing this easily-understandable two-word assessment: “Shit happens.” Featured in conversation at the Hollywood Radio and Television Society Newsmaker Luncheon at the Beverly Hilton Hotel, Moonves elaborated that what happened to the show was “unfortunate” and “wasn’t fun. There’s no good when there are lawyers involved with a television show.” But he is encouraged to find that Men’s ratings are up from what they were a year ago with Ashton Kutcher having replaced Sheen in the cast. He added, “I’m happy that Charlie has a show with a very good showrunner and a very good studio in Lionsgate. We wish him well. We’re more than happy with how well Ashton has done other than his comments about Penn State (condemning via Twitter the firing of head coach Joe Paterno). But I’m glad (Two and a Half Men) is a chapter that’s closing, and with these numbers I’m hoping this show will last for many, many years.” Moonves wouldn’t commit, however, to a multi-year renewal of the show going forward.
Big Media 3Q Corporate Earnings Roundup: Are CEOs Really Worried About Recession? Or Just Looking For Convenient Excuse?
Three months ago, when Big Media CEOs wrapped up their 2Q earnings, they were still relentlessly upbeat about the business. Any worries about the economy? Not then. But the messages they delivered over the past few weeks, as they discussed 3Q, were different. Although they’re still optimistic — remember, they’re paid to be salesmen — now and then you could hear expressions of concern about where things are headed. It stood out when Viacom CEO Philippe Dauman noted that “ad sales growth will face some headwinds.” Other CEOs who are known for speaking bluntly warned that other shocks may bedevil the business. For example, Dish Network Chairman Charlie Ergen said that his satellite company — and others in pay TV — have to fight harder against rising programming costs because “there’s a limit to the price increases that could be passed on to consumers.” Time Warner Cable CEO Glenn Britt warned that premium channels such as HBO, Showtime and Starz “are clearly impacted by the economy as consumers try to cut back.” Either they’re genuinely worried, or they want a scapegoat to blame for things that are going bad, or may soon do so. Whatever the case, we can expect to hear a lot more about the economy when it’s time for the post-mortem on the all-important 4Q earnings.
As for industry performance matters, parents of movie studios had their usual mixed results to brag about or explain away: Time Warner benefitted from Harry Potter And The Deathly Hallows Part 2. Viacom was up on Transformers: Dark Of The Moon. And News Corp beat its chest about Rise Of The Planet Of The Apes and X-Men: First Class. But Disney’s Cars 2 was no match for last year’s Toy Story 3. Comcast’s Universal Pictures had nothing to compare to last year’s Despicable Me. Lionsgate suffered from Conan The Barbarian and Warrior. And DreamWorks Animation’s Kung Fu Panda 2 didn’t contribute as much in the quarter as Shrek Forever After did in the same period last year.
Over at the TV networks, Comcast’s NBC underperformed the Street’s already modest expectations. Execs at almost all the companies were eager to talk about the cash they expect to collect soon from political ads — as well as their favorite new ATM machines: retransmission consent deals and digital streamers including Amazon, Hulu, and Netflix. Speaking of Netflix, CEO Reed Hastings once again tried to reassure investors that he’s focused on “building back our reputation and brand strength” after his decision in July to slap a 60% price increase on customers who wanted to continue to rent DVDs and stream videos. In 3Q Netflix lost 57.7% of its market value and 800,000 subscribers. And since that customer loss was bigger than projected, Netflix shares continued to fall — they’re now down 67.3% since July 1.
Here are some other themes from the latest earnings reports:
Ad sales: They’s good, but for how long? Most television networks report that scatter prices are comfortably above the upfront market from this past summer. CBS chief Les Moonves says prices in 4Q are up by “mid-teens” on a percentage basis, while Discovery says it sees least high single digit percentages. But Disney’s Bob Iger noted that scatter prices have “slowed slightly these last few weeks.” Kurt Hall of National CineMedia — the leading seller of ads in movie theaters — was far more direct when he spoke to analysts after ratcheting down his company’s financial forecasts. “I’m sure that the broadcast and cable guys are sitting there now counting their lucky stars they got their upfront done before August,” he told analysts. “There’s a lot of uncertainty.”
UPDATE: CBS Shares -2% In After-Hours Trading Although Company Vows 2012 Will Be “Record-Breaking Year”
UPDATE, 2:45 PM: Despite the strong 3Q earnings, some investors are concerned about the lower-than-expected revenues and a slowdown in ad-sales growth from 2Q. But that didn’t stop CEO Les Moonves from his usual cheerleading in his quarterly conference call with analysts: With more digital and retransmission consent deals ahead, as well as polticial ads, “the company is set up for a record-breaking 2012,” he says. He’s confident about the ad market despite signs that the economy might weaken. “It is business as usual,” he says. “Very few people are cancelling us because they know they’ll have to pay more” next year. Moonves says the recent online streaming deal that CW cut with Hulu does not mean that CBS might join Comcast, News Corp, and Disney at the online video venture. CBS co-owns CW with Time Warner, but “CW is a different animal. It appeals to a younger demographic.” Moonves adds that the most important takeaway is that “we got paid a chunk of money. There was no advertising split, which is something we refuse to do.”
UPDATE, 11:10 AM: This deal’s more lucrative than it initially seemed. Wells Fargo Securities analyst Marci Ryvicker figures it could be worth as much as $1B for CW. While she acknowledges that “the accounting is somewhat complex,” she says that CBS — which co-owns CW with Time Warner — might see an additional 5 cents a share annually. Lazard Capital Markets’ Barton Crockett says it could contribute 2 cents a share to Time Warner. “The money-losing CW may also retain a minority of the Netflix fee, helping reduce its losses,” he adds. The deal’s so valuable because CW’s young-skewing shows fit well with the audience that streams shows on demand from Netflix. What’s more, Netflix’s payments escalate for long-running series.
Warner Bros Television Group president Bruce Rosenblum won’t comment on the financials but says the terms “won’t be repeated” because “other networks don’t own (as much of) their own content.” This isn’t an exclusive deal in the traditional sense — the shows can appear elsewhere – but Netflix has a narrow right to show entire seasons on-demand from previous years. (Others can license select episodes.) “We know from Day 1 that the syndication on-demand window has been sold, but we also have the ability to sell linear rights down the road,” Rosenblum says. CW shows also may continue to run on Netflix even if the deal isn’t renewed; the online service has the right to keep offering series that begin while it’s in force.
PREVIOUS, 7:55 AM: This one follows the usual pattern: Nothing current — just previous seasons of CW series. And it’s not exclusive. Producers can continue to sell their shows in syndication and to other digital services. No mention of how much Netflix will pay for the programming. Here’s the release:
October 13, 2011 — CBS Corporation and Warner Bros. Television Group announced today a licensing agreement with Netflix [Nasdaq: NFLX] allowing U.S. members of Netflix to instantly watch previous seasons of scripted series that air on The CW from its current schedule through the 2014-15 season.
It’s been mostly quiet these days over the details of the Hulu auction that presumably has ended. Here’s a little news, though: According to a Business Insider report today, Google was the highest bidder at $4 billion, though that price includes special conditions beyond what Hulu owners Disney, Fox, Comcast and Providence Equity Partners have outlined. In that scenario, it’s Dish Network with the highest bid at about $1.9 billion — less than the $2 billion bid the owners sought. Both topped bids by fellow interested parties Amazon and Yahoo and now are the front-runners to make a deal — if a deal ever gets made. The entire sale process has been an odd one, from the players involved to the Hulu ownership not even in complete agreement what they want (Disney wants to sell, Fox much less so). Meanwhile, among bidders, Dish might be more interested in Hulu’s infrastructure than its content, today’s report suggests, having already acquired Blockbuster’s supply lines and unveiling a movie service last week to rival Netflix, and Yahoo is bidding at the same time its board of directors is not-too-secretly entertaining buyout offers of their own.
The companies bidding to buy Hulu may not want to talk to CBS chief Les Moonves. ”What are they getting and how long are they getting it?” he mused in an interview Thursday with UBS investment banking chief Aryeh Bourkoff at The Paley Center for Media. “Are they buying two years of programs for $2B? I don’t know. I shouldn’t say more — I’ll get in trouble.” CBS is the only major network that isn’t part of the Hulu joint venture. And Moonves says he’s glad he made that decision. “We want to control our content.” Online broadcasts cannibalize TV viewing and syndication and that’s something “we’re not going to do. Even a little bit. … We protect the family jewels.” But his company’s programming on premium channel Showtime is different. CBS is gearing up to launch Showtime Anywhere — a digital service for Showtime’s cable subscribers. ”We are half the way getting there,” he said. Like Time Warner’s HBO Go, Showtime Anywhere would enable customers to watch shows from the premium channel on demand via broadband including on mobile devices like tablets and smartphones. Moonves adds that, also like HBO, he won’t charge extra for Showtime Anywhere.
When it comes to the ad market, the CBS chief showed remarkable self-awareness for a media exec saying, “I know I sound a little Pollyannaish.” But he was consistent with the see-no-evil projection he made yesterday during an investor conference. “The world wants us to tell them that the sky is falling. It’s not.” He added that ”the signs are nothing like they were in 2007 and 2008. The only place we’ve seen real softening is with Japanese auto makers. And that’s coming back. … Toyota’s coming back bigger in November and December.”