An upbeat CBS CEO Les Moonves chats with Merrill Lynch’s Jessica Reif Cohen this morning.
Hulu/iTunes: “I hope that NBC negotiates a lot of money” with Apple in its iTunes dispute, but isn’t hung up on iTunes pricing right now because revenue isn’t significant. It’s much more important as a promotional vehicle, in particular for Showtime. Passed on joining Hulu as a JV partner because doesn’t like JVs. Doesn’t want to consult with NBC, NWS on programming issues. But could still work with them down the line…
CW: The Frankenstein hybrid of WB and UPN networks came “close to profitability” last year. “One hit away” and Les thinks that hit is much-hyped Gossip Girl — “a fastball down the middle for us.” Gloats about failure of Fox’s “MyNetwork”
More Dividends Or More Buybacks? Both! Les promises Christmas for everyone: CBS has plenty of money, likes paying $1 per share dividend. Has bought back $3B in shares this year, and that will probably continue. And still has money for more deals. “There’s nothing we can’t do right now.” But stresses caution on big deals. Translation: Not going to see CBS-Facebook deal anytime soon.
Outdoor: Billboard business is a great success story. “I don’t foresee us in the near term or the long term spinning it out.”
Radio: “Challenged” but throwing off lots of cash.
Mobile: Important but no financial impact right now. In fact, that holds for all of CBS’ digital businesses: “Right now, none of the digital space is really significant to the bottom line.”
Digital portfolio: Every big media outfit now needs a social networking strategy. Les says his first move is lastFM, but more to come. Looking at Internet sites every day of the week. “We’re looking at thousands of them.” Will he make a big deal? “If price is right…we have a lot of dry powder.” Valuations have gone up considerably in the 14 companies he’s invested into to date. More love for Quincy Smith.
Digital big picture: Les loves it, of course. Happy to distribute stuff all over the Web, but CBS will handle ad sales for that stuff, and keep most of revenue. Web distribution is both revenue generator and promotional. “When you see a clip of CSI on YouTube, that’s good for us. That’s only good for us.” Les gives Quincy Smith a shout out, notes that his digital dealmaker is very busy. What does all this mean? There’s the rub: Les won’t give out digital revenue estimates. “What it will mean for revenue, we don’t know yet, for a lot of them.”
Hollywood strike/talent relations: Understands that talent wants piece of Internet pie, and they will get it. But impossible to define what those revenues are right now, which is part of the problem. Doesn’t want strike but can handle — get ready for more reality programming, news, etc.
Showtime: Subscription fees will go up. Product is better, and cable operators and consumers recognise that. “Creative, mass hits”. Loves reading press that indicates that Showtime now competitive with HBO, which has never been the case before. “Perception turns into dollars.”
International Markets: “Huge!” “They all need product, and we still do great product here in America.” New Showtime show Californication selling for $700k.
Ad Revenues Declining? No way! If economy is in trouble “I haven’t seen it directly affect advertising.. we are not seeing any trends that say people are pulling back.” National ads strong, local is less strong but still very good. Scatter ad pricing for end of the year is very, very good. Prices up 35%, 40%. And next year’s political campaign will be another boon for CBS. Les is very, very confident here.
New Model For TV Revenues: New revenue streams will be “relatively minor.” There will be shift from network ad model to others, but network programming “remains the best game in town.” No equivalent of giant audience for CSI, etc., online.
Acquisitions: Look for deals on the smallish side, similar to lastFM, SignStory. Would have loved to have bought Univision, would have loved to have bought ProSieben. Pricing was too high.