Next year's Super Bowl ads will cost 11% more on CBS than they did on NBC

Super Bowl Kyle Terada/USA TODAY SportsSuper Bowl XLIX, won by The Seattle Seahawks.

The cost of a 30-second ad slot during Super Bowl 50 has soared to $US5 million, according to next year’s big game broadcaster CBS.

That’s up 11% on the highest price this year’s broadcaster NBC sold its Super Bowl ads for. NBC charged as much as $US4.5 million for an ad during the game last year.

The last time CBS aired the Super Bowl, three years ago, the average 30-second spot cost $US3.8 million.

Speaking on the company’s second quarter earnings call, CBS chief executive Les Moonves reiterated that Super Bowl ads airing on TV will also stream online at the same time, generating even more revenue.

“We are learning a lot, and as you can see, as you read what Comcast is doing, what DISH is doing, is the addressability is becoming clearer and clearer, and that is only good news for us. The more they know [about their audiences,] the more we’re going to be able to sell,” Moonves said.

Moonves dismissed a question that suggested the sheer production costs of broadcasting the game, plus incremental sports rights, may make it tough to make money.

He responded: “If there’s a rap on it, tell them we will take the Super Bowl every single year, year in, year out, forever. So you know what, if the incremental doesn’t outweigh the amount of money you get per spot, what NBC got last year, it is very, very worth it. You are going to see it in revenue and in profit in 2016, and we love having it. We’re very excited about having it. There’s no downside.”

Moonves has previously said a Super Bowl spot on CBS could eventually fetch as much as $US6 million.

Meanwhile, CBS is entering its biggest ever year in terms of NFL programming, which also includes Thursday games and Sunday games. Moonves made the “bold statement” that CBS is on track to “win” for the 2015/16 season, versus competitors in terms of ad revenue.

CBS Q2 earnings

CBS reported a 1% lift in revenue to $US3.22 billion in its second quarter, but profit fell 24% to $US332 million as gains in its cable networks were offset by other divisions’ performances and investments in programming and new digital services.

The company launched its Showtime over-the-top streaming service in the quarter, which it believes can reach a new audience of up to 90 million households. On the earnings call, the company’s chief operating officer Joe Ianniello said every 1 million new subscribers would equal $US100 million of profit. CBS is also considering exporting the Showtime OTT service internationally.

TV observers and investors have been nervous about the impact of “unbundling” from big cable subscriptions. Disney’s stock was hammered yesterday after investors were spooked about whether ESPN can keep apace with the cord-cutting trend.

But Moonves said CBS is well-positioned to keep up with changing consumer viewing behaviours. He said (courtesy of Seeking Alpha):

Yes, I mean, look, you’ve made a valid point, one that we’ve been saying for a long time. As the world proceeds into the skinnier bundles, the smaller bundles, it does leave anxiety out there for a lot of companies. We are a big proponent, because guess what: every skinny bundle deal that’s out there — and obviously we’ve made a few of them already — the ecosystem gets validated towards he who has the most viewers gets paid the most money. I know it’s an odd concept for some of the cable companies, but that’s the way it should be. We’re sort of re-regulating what the system should be. So any time there’s a new bundle that you hear out there, you can assume that CBS is applauding it, because we are going to get paid more than we get paid by the traditional MVPDs. So we are one of the few companies that is very much in favour of it. Our major brands are CBS and Showtime. And as this world evolves and it is evolving, we are ready for it. We are ready for it, so it should be greeted well.

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