CBS will see $3.75 billion in additional, or incremental, revenues in 2020 vs 2015 with cash flowing in from four “pillars” — pay TV deals, online services, international syndication, and changes in viewing options — COO Joseph Ianniello forecast at the broadcaster’s Investor Day gathering.
He raised the company’s projection for the amount of money it will make from TV station retransmission consent deals, and reverse compensation from affiliates, to $2.5 billion by 2020. Execs previously said they expected $2 billion by then.
The new number represents $1.7 billion in incremental revenue over 2015.
Much of the improvement will come from recent deals granting cable and satellite operators the right to stream CBS programming to subscribers when they’re out of the home.
Ianniello says the company could see close to $3 per subscriber each month from CBS-owned stations’ deals with pay TV distributors. An additional $2 would come from affiliates after they make similar deals with local distributors.
Those are reasonable targets, he observed: The major broadcasters, which account for 40% of TV ratings, only account for $6 billion of the $44 billion in annual revenues generated by 180 channels.
In the second pillar, online, Ianniello says he expects to see at least $800 million in additional revenue in 2020. Half would come from Showtime’s new streaming service, and the rest from CBS All Access.
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Each service could have 4 million subscribers in five years considering that Netflix now has 45 million, Amazon has about 25 million, and Hulu has 10 million, the COO says.
CBS All Access currently nets $5 a month from each subscriber who pays $5.99, and collects an additional $3.50 from ad sales. That’s “comparable” to what CBS nets from the Showtime service, he says.
Execs say that CBS All Access could introduce one new series each quarter, beginning with Star Trek in 2017. They would premiere on the CBS broadcast network as well as online, but remaining episodes would only be available to subscribers.
CEO Les Moonves says he’s “working on an initiative” to offer Showtime and CBS All Access together for a discounted price.
For International syndication, the third pillar, Ianniello says he foresees $2.3 billion by 2020 — an increase of $800 million vs 2015. CBS can achieve that even “growing at a slower rate than we have in the last five years.”
The company also has high hopes to rake in additional cash from distributors who want CBS networks and programming for their new skinny bundles — with fewer channels, but lower pricing, than today’s expanded basic packages. Assuming that there are 4 million subscribers, each accounting for $4 a month in payments to CBS, the company could see an additional $200 million.
And the COO believes there’ll be another $250 million available as CBS finds ways to sell fresh ads into time shifted TV shows, including ones that cable offers on demand.
In a Q&A session with analysts, Moonves said that when it comes to acquisitions “we’re constantly looking at everything. Every name of every company that you’ve heard that’s for sale, we’ve looked at it. We have a great balance sheet. But there’s nothing we’re going to do that doesn’t make total sense for us.”
He added, though, that “if there’s an opportunity for us to increase the ability to produce content, we may do that.”
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