Eye banks on Verizon deal

Phone co. to pay CBS for TV subscribers

CBS has extracted cash from Verizon for each subscriber who buys the phone company’s new TV service, which will include all the local CBS-owned stations.

The key paragraph in the statement from Leslie Moonves, president and CEO of CBS Corp., reads: “With each subscriber that Verizon’s FiOS adds, CBS will directly benefit.” FiOS is the shorthand for Verizon’s fiber-optic TV service.

Moonves has publicly vowed to insist in all his coming deals with cable operators, satellite distributors and phone companies that they pony up monthly subscriber fees for the CBS O&Os, just the way they pay, for example, $2.75 a sub on average for ESPN, 90¢ for TNT and 55¢ for USA.

As part of the CBS deal, though, Verizon will get video-on-demand rights to such network hits as “CSI,” “NCIS” and “Survivor,” and VOD of any digital services produced separately by the CBS-owned station, such as a 24/7 local-news channel.

While not commenting on the cash-for-carriage issue, Terry Denson, head of programming for Verizon, said CBS will derive big benefits from the deal, because 99% of Verizon’s subscribers will get instant access to VOD, compared with an average of between 30% and 40% of cable subs.

Denson said Verizon will not charge its subs an extra pay-per-view fee for calling up “CSI” or “NCIS” in the on-demand window. But the more Verizon customers come onboard for the CBS programs, the sooner CBS will be able to sell ads on the VOD run of these hit series. Verizon would have no problem carrying ads on “CSI” on demand, Denson said.

Verizon launched its FiOS service Sept. 22 in Keller, Texas. The service has spread to more than 35 communities in seven states: New York, Texas, California, Florida, Massachusetts, Virginia and Maryland.