The upfront ad sales season would seem incomplete without a grandiose forecast from the CBS chief. But Les Moonves held his tongue regarding the upcoming market for 2013-2014…until tonight. He told analysts, following CBS’ …
Les Moonves is out to get Aereo by any means necessary, but he “doesn’t lose sleep over it,” the CBS Corp president and CEO told the Milken Institute’s Global Conference today. “Barry Diller has done what he likes to do, disrupt things,” Moonves added. However, the CBS chief did say that if the situation couldn’t be resolved in the courts, he is more than willing to take CBS to cable. “We can do it in a few days. If we go to cable, if we are forced to, then about 10% of America will not get our signal and I don’t think they will like that,” Moonves said Tuesday. The CBS chief said that with around 2,000 subscribers in NYC, the “illegal” Aereo won’t hurt the network but that he still intends to shut them down. “We will go after them in the courts and if that doesn’t work there are other remedies. There are financial remedies; there are congressional remedies.” On Monday at the conference, IAC CEO Diller said that CBS and the other broadcasters suing Aereo want Congress to save them if their copyright infringement suits fail. Fox and Univision have also threatened to move to cable if Aereo prevails.
This was one of the points the CBS chief just made to investors to promote his favorite message: that all’s well for CBS and broadcasting. He’s been lobbying to have advertisers pay for the viewers who see commercial spots on DVRs as much as seven days after they first air, up from today’s three days. And that’s “coming right around the corner, and that will be good for us,” he said at a wide-ranging Q&A session at the Deutsche Bank Media, Internet and Telecom conference. Even with the existing C3 arrangement he predicts that in the upfront market “CBS will lead in volume and CPM increases” although he declined to provide a specific target. He adds, though, that “the thing that the press writes that bothers me the most is that 18-to-49 is the only viewer the advertiser cares about…The fact is, we win total viewers by more than we win every other demographic. We welcome everybody and we sell to everybody.” He’s also enthusiastic about digital streaming services including Netflix. “House Of Cards? That’s great. I don’t view them as a competitor. We’ve talked to them as a production company about producing shows for them. So they’re our friend, not our enemy.” Netflix also isn’t the only game in town. “Amazon’s jumping in in a big, big way,” Moonves says. But CBS will stick with selling online services for its older shows, especially serial dramas. “We’re not going to risk our entire schedule.” That’s the main reason why CBS didn’t join Hulu. If the company puts a show on CBS.com that interferes with viewing at the main network “I can pull that in 10 seconds. At Hulu you can’t. Once you give it up, it’s gone. Your child has left you.”
I was starting to think that the popular view of the CEO as a supersalesman for CBS was becoming a tired caricature, until I saw what happened to the company’s stock today. Shares were +4% — to a new high (at least since its spin off from Viacom at the end of 2005) of $44.64 — even after the broadcaster last night disclosed Q4 financials that fell short of the Street’s revenue and profit expectations. It certainly helped that CBS also announced a $1B accelerated share repurchase. But if that’s all it took to win over investors then they should be in love with DirecTV, which yesterday announced a $4B share repurchase, and beat Q4 expectations. Yet it’s down about 5.8% since Wednesday as investors focused instead on the shot the company will take from Venezuela’s currency devaluation. It seems that the Street is more forgiving of CBS at least in part because Les Moonves has dazzled investors with his boundless optimism.
Shares are down slightly in initial after-market trading following a report that seems to present more questions than answers. CBS increased its share repurchases and reported net earnings of $393M, +6.2% vs the end of 2011, on revenues of $3.7B, +2.4%. But analysts expected the top line to be higher, at $3.79B. And adjusted earnings from continuing operations came in at 64 cents a share, short of forecasts for 69 cents. At the Entertainment unit — which includes the broadcast network and studios — revenues fell 3% to $1.99B with operating income +19.1% to $280M. The company says that ad revenues and retransmission consent fees were up, but the unit didn’t have the same bump it had last year from the deal to sell streaming rights to shows from The CW network. At the Cable Networks, which include Showtime, revenues were up 10.9% to $438M with operating income +4.1% to $176M. The improvement was partly due to higher rates and subscriptions for Showtime. In Local Broadcasting, the influx of political ads contributed to a 9.2% increase in revenues to $787M with operating income +21.9% to $295M. That income figure would have been higher had it not been for an $8M restructuring charge.
Bernstein Research’s Todd Juenger seems to think so based on his light-hearted, and occasionally acidic, effort this morning to develop awards for media business types who don’t qualify for, say, the Academy Awards. (For example, his “Best Actor” award to the executive with the highest earnings goes to CBS’ Les Moonves who made about $70M in 2011.) The stand-out line, though, summarizes his view about what it takes to be a Big Media CEO: They ”are rewarded mostly for doing nothing but collecting affiliate fees and buying back stock,” he says. “It takes a lot of guts to deviate from that formula, given the safety and reward that can be gained by sticking to it.” Juenger also nails the Alice In Wonderland logic companies use to justify CEOs’ jumbo-sized pay — especially when the compensation shows little correlation to stock performance over the last three years. For instance, he notes that “The top two earners over the three-year time frame, by far, are the CEOs of CBS ($171M) and Viacom ($162M), proving it’s especially lucrative to be a media CEO working for Sumner Redstone when he thinks you’re a ‘genius’ (CBS) or a ‘genius and the wisest man I ever met’ (Viacom).”
Shares are up 8.3% in after-hours trading following the announcement. Investors have long wanted CBS Corp to do something with the billboard unit, which didn’t seem to fit at a company focused on entertainment and news. CEO Les Moonves says he’s “enthusiastic” that the decision to turn the U.S. operation into a Real Estate Investment Trust, and sell the businesses in Europe and Asia, “will achieve significant value for our shareholders.” A REIT doesn’t have to pay corporate taxes but must give investors at least 90% of its taxable income. Last month, Moonves told investors that while CBS Outdoor is “a very good business”, CBS has “explored different options.” He added, though that there was “a very likely potential of keeping it and operating it and doing very well with it.” Analysts expect CBS to report that the Outdoor operation generated about $1.9B in revenue in 2012, up less than 1% vs 2011. Here’s today’s release:
The CBS chief flipped the argument that Time Warner Cable CEO Glenn Britt made yesterday when he said that he may drop pricey cable channels that generate hash-mark ratings. “That means for the channels that are getting viewers, he’s going to pay more,” Les Moonves told the UBS Global Media and Communications Conference today. “He should pay the most for the guy who’s the No. 1 network.” Moonves milked the laughs: “We’re going in next year for $7″ per month per subscriber. Although he acknowledged that he’s joking, he added that “it’s bugged us that cable channels showing reruns of our shows were getting paid more” than CBS was for its first-run programming.
Moonves kept things light, referring at one point to actor Angus T. Jones as “that kid on Two And A Half Men who’s getting paid $300,000 per episode to talk bad about me.” Jones recently called on people to stop watching the show due to its “filth.”
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 …