CBS CEO Leslie Moonves continued to downplay the threat posed by Aereo — the Internet startup facing a showdown with broadcasters at the Supreme Court — while also suggesting the Eye could respond by making drastic changes to its biz by delivering its own “over-the-top” service.
“If Aereo should work — if they can win, which we don’t think they can — we can go OTT,” said Moonves, speaking Tuesday at Deutsche Bank’s Media, Internet and Telecom Conference.
Added Moonves, “If the government wants to give them permission to steal our signal, we will find another way to get them our content and get paid for it.”
It’s not clear that Moonves was suggesting CBS would discontinue over-the-air broadcasts, which would be enormously disruptive to its business. Asked for clarification, a CBS rep said “it’s an option but nothing that we’re planning on or want to do.”
But his statement raises the question: Why hasn’t CBS offered a full live Internet stream of its programming already, to head Aereo off at the pass? Moonves didn’t say so, but clearly the Eye believes the current industry structure — in which CBS gets paid by pay-TV distributors for carrying its signal — is more lucrative than a direct-to-consumer OTT service would be.
In any case, if CBS does introduce its own streaming-video service, it would likely have to renegotiate rights with multiple partners, including sports leagues like the NFL. In addition, an OTT service would dramatically reduce CBS’s leverage in extracting retransmission-consent fees from cable, satellite and telco TV operators.
Previously, CBS and other broadcast networks have raised the specter of converting broadcast networks into cable channels if Aereo prevails.
Aereo, whose backers include IAC’s Barry Diller, uses tiny remote antennas to receive TV broadcasts, then reformats and streams live or recorded programming to subscribers over the Internet. Broadcasters argue that represents copyright infringement, while Aereo’s defense is that it simply rents equipment subscribers could set up themselves to receive TV signals they’re entitled to. The Supreme Court is scheduled to hear the broadcasters’ appeal in the case next month.
More broadly, CBS is “very well situated” for an over-the-top future, however that plays out, according to Moonves. “OTT, if it becomes a prevalent way of doing business, we are easily able to do that with CBS and Showtime,” he said.
Also at the conference, Moonves said that of the 18 pilots lined up for the 2013-14 season, CBS expects to pick four — two comedies and two dramas. He said the schedule is “tight,” between returning shows and the addition next season of Thursday Night Football through CBS’s expanded pact with the NFL.
“You better be damn good or you’re not going to get on,” Moonves said.
Moonves touted CBS’s financial prospects in the years ahead, with the growth of cable and Internet subscription video-on-demand services like Netflix serving as bigger buyers of its programming worldwide. In addition, CBS projects that by 2020 it will generate $2 billion in retransmission consent and reverse compensation fees.
He referred to CBS’s standoff last summer with Time Warner Cable, which resulted in a monthlong blackout on the cable operator. The deal with TW Cable “was inevitable” because CBS has rights to the NFL, which “they can’t live without,” Moonves said.
As for how Comcast’s $45 billion bid for Time Warner Cable will affect that deal, Moonves said the agreements with the two operators would have to be combined if the deal goes through. “There’s going to be a discussion about how you get those two contracts together, but it will get made,” he said.