Indeed, he told investors that the growth of digital streaming helps to set CBS apart from the pack, mostly due to its strategy to produce shows for multiple platforms — including sometime rivals such as Netflix.
“When Bob Iger says ‘Oh, we’re going to be flat.’ Or Comcast says, ‘Our subs are declining’ — for CBS this is viewed as positive news,” Moonves says. “When we get lumped in with that there’s a misconception here. We are different from them.”
His company plans to introduce its CBS All Access streaming service in Australia, even if competitors including Fox block CBS’ effort to buy Network Ten, the country’s No. 3 broadcast network.
“The international market has grown immensely because of the over-the top services,” he says. “It gives us many more places to sell our content.”
But he says CBS can “have its cake and eat it too” by also expanding CBS All Access. “There are people out there clearly who want this service,” he says. “We did it domestically and we’re going to do it internationally.”
He did not factor overseas subscriptions into his prediction that CBS All Access and Showtime’s digital platform will together have more than 4 million subs by year end and 8 million by 2020 — a forecast that he says may prove to be “rather low.”
The CEO noted that Showtime has changed with way it schedules shows to accommodate the online offering.
“We have a brand new show every three to four weeks, which keeps those peak OTT subscribers provided with enough original, new, exciting content,” he says.
Moonves also banged the drum for his just-announced plan to introduce a 24/7 sports streaming service similar to the company’s CBSN news offering.
Unlike Disney, which is planning to introduce its own entertainment and sports streaming services, “we developed the (streaming) technology internally,” he says. “We didn’t buy BamTech for a zillion dollars. We did it internally. Which is a big plus: We didn’t have to rent anything.”
And with its existing sports assets “the investment for us is not a lot of money,” he says. “There’s a place in the marketplace for straight, factual clips, highlights, scores. I’m a big sports fan. I’m turning on ESPN a lot and seeing people yelling at each other. I want to see whether the Dodgers or the Yankees won last night. Often it takes 20 minutes to get that.”
The sports service initially will be ad-supported but may have “dual revenue streams down the road,” he says.
Moonves also is bullish about the state of the TV network ad market.
“Go back and look at April where all the analysts (said) ‘Oh, the network advertising market is down’,” he said. “Not true. Not for anybody. Not even for the networks that were down 20%. Their CPMs and their volume were up.”
With the new prime time season about to begin, “we have a lot of advertising dollars in place,” he says. “The scatter market is lining up terrifically. So we’re very excited.”
Moonves told investors that he expects the FCC to raise the cap on TV station ownership, now limited to 39% of all households, and that Sinclair Broadcast Group’s $3.9 billion deal to acquire Tribune Media “will happen.”
The CEO took a dig at Fox Executive Chairman Lachlan Murdoch, who yesterday failed to mention his Fox broadcast network when he mentioned the company’s core assets.
“We don’t feel that way,” Moonves says. “We feel pretty strongly that it is a very core asset. We make a lot of money — I guess maybe they’re not. Our stations are doing extremely well. We make a lot of money — maybe they’re not. So our outlook on that is very different.”
Moonves says he isn’t worried when he sees deals like the multiyear one Netflix recently made with Shonda Rhimes who created Grey’s Anatomy and Scandal for ABC.
“She’s a brilliant talent,” he says. “She’s going to make even more money at Netflix. And they have very deep pockets and they’re going after talent.”
Still, CBS is producing 66 shows up from 30 five years ago. “We’re doing two shows for Netflix. We have a show for iTunes. We are expanding our production presence. Does competition become tougher? Yes. But that’s what we do….Our batting average over the last 15 years surpasses our competitors. Our [return on investment] on our shows making it into syndication is much higher than most people’s.”
He adds that the potential for creators to profit from syndication on a CBS show is “a lot better than the back end on a Netflix show. A guy like Chuck Lorre has gotten really, really rich from Big Bang Theory and Two And A Half Men. He would not have seen that kind of money on Netflix.”
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