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CBS’ Leslie Moonves: New Revenue Sources Drive 40% of Earnings

The radical changes the entertainment business has undergone as a result of new technology and expanding world markets was exemplified to Leslie Moonves by one fact: In a recent reporting period, he saw that 40% of  his company’s earnings came from sources that did not exist five years ago, the CBS Corp. boss told an audience Wednesday at the Milken Institute Global Conference.

Speaking on the topic of “Trends in Global Entertainment,” Moonves said that sources such as Netflix, Amazon, expanded international markets, retransmission consent fees and a new paid subscription service, CBS All Access, had augmented what was once an advertising-dominated medium.

And he said that even more revenue lies on the horizon, as markets like China open more to American entertainment companies.

“They are going to start watching our television shows. Well, they’re already watching. But they’ll start paying for watching them,” Moonves said to laughter from the audience of business, finance and media leaders, who gathered for this week’s conference at the Beverly Hilton Hotel.

Moonves said that “The Big Bang Theory” had become the No. 1 show in China but that neither CBS nor producer Warner Bros. Television had received “one penny” from the distribution. “But that will change, that will change,” he assured.

Moonves was joined on the panel by Sony Entertainment boss Michael Lynton, producer Nina Jacobson and Peter Rice, chief executive of the Fox Networks Group.

Jacobson said American content makers must be hugely cognizant of foreign audiences when making films and TV programs today. “Only a very, very inexpensive movie can afford not to travel now,” she said.

Many nations, partiucalry China, have pushed hard for local production, but the panelists said they think the Hollywood brand will continue to carry tremendous clout overseas. “The product we deliver throughout the world, I think, stands above most of the others,” Moonves said. “Certain countries…have tried to compete on a local basis and they haven’t been able to do that. They haven’t been able to compete with the kind of quality that we do.”

The growth of middle class audiences internationally does not mean all content can succeed internationally, Lynton said. “Drama works internationally,” the Sony boss said, “but comedy remains domestic.” He noted that “The Simpsons” was an exception. “That works everywhere in the world,” Lynton said, tipping his cap to Rice of Fox, which controls the cartoon mainstay. “Homer is a God.”

Moonves said that technology had exploded other old truisms. Television companies once would have never launched new shows during summer, for instance.  “Now advertising is less important,” said the network chief, noting that one-third of revenue could come from ads, while another third might be derived from online partners and the final third from international sales. He cited “Under the Dome” as the type of summer-launch program that “can be profitable from day one.”

And the reduction in appointment viewing has created new opportunities, he said. He noted that 80% of the people signing up for CBS All Access did so for “catch-up” viewing of recent programs.“This couldn’t have existed three years ago, five years ago,” Moonves said. “This is a whole new model.” He declined to say, however, how much revenue CBS had taken in from the new service.

All the changes in markets and platforms haven’t changed some truisms, Jacobson said. She noted that women continued to take a backseat in many programming and greenlight decisions.  She noted that it was half of the world’s audience and an incredibly dependable one, which was not preoccupied with “videogames, sports and porn.”

That drew the biggest laugh of the hour session.

“I do think it’s starting to change,” Jacobson said. But “it is a ridiculously slow process of change given how obvious it is, over and over again, that women can drive a side of the business.”

Lynton did not escape the session without a question about “The Interview,” last fall’s satire of North Korean dictator Kim Jong-un that triggered a massive computer hacking attack against Sony. The studio hesitated to release the film, then put it out over multiple online sites, and moderator Julia Boorstin of CNBC wondered if that could become a model for future releases.

Lynton said no, that the situation surrounding the film was unique. So unique, he said, that audiences at theatrical screenings in L.A. responded to the film as a defense of free speech.

“People stood up and said the Pledge of Allegiance, and sang the National Anthem,” Lynton said, pausing, “For a Seth Rogen comedy.” That, too, drew a big laugh.

Lynton said he tried not to overuse the word “unique,” but concluded: “This truly was unique.”

(Pictured: Michael Lynton and Nina Jacobson)

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