Five years ago, Leslie Moonves set off on a mission to get paid.
As soon as CBS Corp. completed its corporate divorce from Viacom in January 2006, Moonves embarked on an ambitious campaign to squeeze cash out of cable and satellite operators in top markets for the right to carry the CBS network via the Eye’s O&O stations.
In years past, CBS and the other Big Four network congloms had often traded the retransmission consent rights for carriage for new cable channels, promotional considerations and all manner of other compensation. But once Moonves was handed the reins of a slimmed-down company with CBS and its stations and feevee cabler Showtime as its cornerstone assets, it was clear to him that the horse-trading days were over. The time had come for cable and satellite operators to push cash on the barrel — or cents on the subscriber, in the argot of the subscription TV biz.
“I felt one of the great injustices of all time was the amount of money being paid (in carriage fees) for cable networks that get a fraction of the viewers of broadcast networks but get so much more revenue,” Moonves says. “It became self-evident that this was a revenue stream that needed to be paid to (broadcast) networks and it needed to be paid in cash.”
With programming costs skyrocketing and viewership splintering, CBS and its peers needed the security of a secondary revenue stream. A five-year retrans pact reached in January 2009 with Time Warner Cable was a harbinger of bigger paydays to come. Time Warner positioned it as higher fees for Showtime in an effort to avoid setting the precedent of shelling out fat retrans fees.
But the genie was out of the bottle. Fast forward to 2011: CBS is projecting a haul of about $250 million a year by 2012, and retrans cash has become a top priority for every broadcast group.
“The balance is still out of whack in terms of the correlation between eyeballs and fees, but when those numbers come into line the upside is really tremendous for us,” Moonves says.
However, it’s not all blue skies on the horizon for broadcasters. After bruising retrans showdowns involving Fox and ABC stations, cable operators linked arms with their rivals — sat-TV and telco providers — to lobby the FCC for a major overhaul of the retransmission consent law.
The brewing retrans fight at the FCC and in Congress is one reason why CBS, along with Fox, rejoined the National Assn. of Broadcasters in May 2010. The two largest TV station groups (by reach) had pulled out earlier (Fox in 1999; CBS in 2001) after clashing with previous NAB regimes over the org’s focus on station issues that were at odds with the interests of the Big Four nets.
Moonves credits the leadership of Gordon Smith, the former Oregon senator named NAB prexy in September 2009, for bringing the Eye back into the tent.
“He came in and started addressing issues that were important to us,” Moonves said. “We realized that what had divided us from the (CBS) affiliate body seemed rather minor compared to the current events of the day. Gordon had a lot to do with making the NAB an organization that suits our needs.”
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