CBS acting CEO Joe Ianniello, CFO Christina Spade and CBS Sports Chairman Sean McManus made the company’s case to Wall Street analysts on the fourth-quarter earnings call despite results that fell short of analyst expectations.
Record results show the 90-plus-year-old mainstay is on the right track, Ianniello maintained, with upgraded streaming targets now forecasting 25 million domestic streaming subscribers by 2022. The split is roughly 50-50 between CBS All Access and Showtime, the acting boss said, though the company has reported only a combined number. Despite the positive signs, with the company just emerging from a period of intense turbulence, analysts focused questions on a number of unknowns. Topics ranged from NFL rights to strategy around streaming versus broadcast or owned IP versus licensing, and progress by the company’s newly constituted board of directors.
Ianiello fielded one question about that most evergreen of topics: a potential reunion with Viacom, given that both are controlled by National Amusements and once were under the same corporate roof. “The management team is focused on operating the company,” he said.
The former longtime deputy of Les Moonves, whose CEO tenure came to an abrupt end last September after a swirl of sexual misconduct allegations, grew passionate on the subject of how CBS has cranked up its production engine. The company is producing 76 series, up 17% from a year ago, with Showtime expecting a 30% uptick in original hours in 2019.
Subscribers to CBS All Access and Showtime’s OTT service remain bought-in to the idea of pay-TV and shouldn’t necessarily be viewed as cord-cutters, Ianniello said. “They’re are not leaving the ecosystem; they just want more,” he said. “So let’s give it to them.” One strategy getting increasing consideration is using one platform to push to the other. “What if we took Season 1 of The Good Fight [the All Access spinoff of The Good Wife] and put it on CBS broadcast network” Ianniello asked. “We’re literally thinking all of the possibilities through. Because the quality of the content we’re producing for All Access does that. We’re really thinking about that going forward. That has the effect of reducing costs. … It’s an efficient use of intellectual property.”
In terms of global rights and the dilemma its media business peers are wrestling with — how much content to reserve for its own platforms instead of monetizing through licensing — Ianniello said the strategy with Star Trek: Discovery offers a guide to the company’s thinking. Netflix took international rights to the revival, with CBS locking up domestic streaming via All Access.
NFL rights run through the end of the 2022 season on CBS, with talks likely to heat up far sooner than that. Executives took several questions about whether CBS could fend off tech rivals like Google or Amazon, and whether a new configuration might crop up instead of the current map, which is divided into five territories: AFC and NFC games on Sundays, and primetime contests on Sunday, Monday and Thursday.
“Since we brought the NFL back to the network in 1998, we’ve been successful three times in renewing rights,” McManus noted. “The NFL values broad distribution of its product.” Ianniello added that the Thursday night deal with Fox, which followed similar broadcast packages on the night, indicate as much.
CBS would prefer to stick with its current AFC package, he said, because of the location of many of its affiliated stations and the results to date. Despite the level of interest and the evolution of technology, he said, “It wouldn’t surprise me at all if the same paradigm existed” when new deals are struck. “But we need to be flexible.”
As to the newly elected board of directors, more than half of whose members have come aboard in the post-Moonves era, Ianniello described a smooth process. Board members have been “working with our entire senior management team, laying out priorities. We are 100% aligned with our board. They see the returns. They see the math of it.” He added that he “couldn’t be more pleased” with the state of relations.
Spade was asked about the impact of political spending, and she broke it out at more than $100 million in the quarter due to the mid-term elections. “Political infighting is good for CBS,” she quipped, recalling for some listeners the infamous Moonves joke about President Donald Trump perhaps not being good for America, but “damn good for CBS.”
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