CBS is in talks to produce an original series for Netflix as it expands its content business, moving beyond selling the streaming service its old series.
CBS chief exec Leslie Moonves didn’t provide details of the new show. But the Eye’s willingness to produce content for Netflix is proof that Moonves doesn’t see Netflix as a rival to CBS. “Unless they are doing 22 hours a week of premium content, we don’t look at them as a competitor,” he said.
Streaming licensing pacts with Netflix and other outlets plumped up CBS profits last quarter even as revenue dipped in part on lower political advertising. But that will change fast as the primaries heat up, he promised during a conference call Wednesday to talk about earnings. CBS is “looking forward to a lot of nastiness on both sides” to fill its coffers, Moonves said.
“They’re talking about the number $2 billion. Generally speaking, we get 9%-10%. That’s generally the ballpark,” he said. That was the figure spent for local broadcast spots in the political 2008 cycle. Moonves sees it flowing amply to radio as well as TV.
CBS Corp. profit rose 30% last quarter to $370 million. Execs promised that existing output agreements with Netflix, Amazon and Hulu Plus and new ones would keep the coin flowing year after year.
Revenue slid to $3.78 billion in the fourth quarter from $3.9 billion on tough comparisons from the year before, which included second-cycle syndication sale of “CSI.”
The entertainment division — comprised of CBS, CBS Television Studios, CBS Studios Intl., CBS Television Distribution, CBS Films, and CBS Interactive — saw revenue ease 1% to $1.9 billion. Advertising revenue was flat.
But operating income rose to 31% to $275 million on streaming deals, retransmission pacts and lower costs.
Execs said scatter prices are up in mid-teens from last year’s upfront and major categories are rebounding led by automotive. CBS has sounded the most upbeat among big media companies so far on the state of the ad market after a dour fourth quarter. “Because of our ratings we are commanding the bulk of the scatter market,” Moonves said.
Local broadcast, including TV and radio stations, saw revenue fall by $100 million to $721 million. Operating income was down 18% to $242 million.
Cable network revenue rose 10% to $1.62 billion. Adjusted operating income nosed up 3% to $169 million. These are heady times for Showtime, which passed 21 million subscribers and just won two Golden Globes including best television drama series for “Homeland.”
At Simon & Schuster, revenue eased 1% to $229 but sales of digital content grew 83%. Digital sales are cost less and are more profitable, which led to a 50% boost in operating income to $27 million.
Outdoor revenue firmed 1% to $514 million. Operating income surged 80% to $76 million on more profitable contracts.
In brief remarks at the opening of the call, CBS chairman Sumner Redstone called Moonves “a genius” at least four times.
“Thank you Sumner, very much, for that overly kind introduction,” Moonves said.