Joe Ianniello, CBS president and acting CEO, has a new name for the process known for decades in the pay-TV arena as “churn.”
Ianniello, speaking Tuesday morning at the Deutsche Bank Media and Telecom conference in Palm Beach, Fla., said the company’s internal shorthand for the loss of a CBS All Access subscriber is to consider them on “pause” rather than gone for good.
The usage data on All Access and feedback from subscribers has proven to the CBS team taht the introduction of new content can motivate users to re-establish their subscriptions. And turning back on a streaming service can happen at any time with a couple of keystrokes — a much simpler process than with traditional MVPDs that require a subscriber to return costly set-top boxes and other equipment to a distributor.
“We don’t call it churn we call it pausing,” Ianniello said. “Because they come back when we launch new original content, or when we get the NFL or we put (professional) golf on. We want to limit or eliminate all of the pauses,” Ianniello said.
Ianniello’s early morning Q&A with Deutsche Bank’s Bryan Kraft was notable as a platform for the executive who is a contender for the permanent CEO job at CBS. Ianniello has been acting CEO ever since CBS’ longtime leader, Leslie Moonves, was forced out n September amid a storm of sexual misconduct allegations. There was no mention during the 45-minute session of the CEO search process under way or the speculation that CBS will be nudged back into a merger with Viacom soon by controlling shareholder Shari Redstone.
Ianniello talked up the growth trajectory of CBS All Access and Showtime’s standalone app and how CBS was the canary in the coalmine among Big Media players in going OTT. CBS last month raised its subscriber projections for All Access and Showtime to 25 million by 2022. At present, both services have about 4 million subscribers apiece.
The OTT growth trajectory around new programs has also given CBS the “confidence” to invest significantly more in programming for All Access and Showtime. Under chief content officer David Nevins, CBS Corp. is now focused on a
“year-round programming strategy that reduces those pause and increases subscriptions,” he said.
Ianniello said the impetus to launch All Access in 2014 and standalone Showtime in 2015 was to prove to MVPDs that CBS Corp. content was worth top dollar in carriage fees. CBS’ run as America’s most-watched network for 11 years in a row deserves premium pricing, Ianniello argued.
“We are the most-watched network bar none across broadcast and cable, so we provide the most value to their offering and we expect to be paid fairly for it,” Ianniello said. The economics of CBS’ wholly owned streaming platforms are better for the Eye and traditional carriage agreements with MVPDs. “Now we’re sitting here with millions of subscribers paying us significantly more than any third-party distributor pays us.”
CBS will test its strength in the coming months as it has carriage renewals looming with DirecTV this year and Comcast next year. Distributors are taking a hard line on programming costs at a time when the traditional cable and satellite TV operators are struggling to adapt to consumers’ embrace of streaming platforms and lower-cost TV bundles. Ianniello said the long list of renewals that CBS has inked in recent years with smaller MVPDs should set the market rate for deals with the nation’s largest MVPDs.
“The marketplace has spoken,”Ianniello said. “We’ve done lots of these since 2013 you really haven’t heard about a dust-up with CBS,” Ianniello said. “We’re now six years from the blackout we had (in 2013) with Time Warner Cable. That gives us a lot of proof points along the way.”
Kraft asked Ianniello if CBS felt any urgency to grow at a time when its larger competitors are bulking up still more. Ianniello’s Q&A came the same day Disney announced March 20 as the closing date for its $71.3 billion takeover of 21st Century Fox. Ianniello said CBS is open to deals for content and IP but he also maintained that CBS is “strategically complete” as it stands today.
“I’ve never felt small when we’re negotiating across the table vis-a-vis an MVPD or advertisers,” Ianniello responded. “We have content that has mass appeal that people really identify with.”
Among other topics raised:
Cost cutting moves: CBS is looking for about $100 million in cost savings in the next three years from belt-tightening and restructuring in search of greater efficiencies. That process could lead to streamlining of redundant operations and voluntary employee buyouts. “We reorganizing and thinking about functions that go across multiple divisions,” Ianniello said.
Preparing for the end of “The Big Bang Theory”: Ianniello cited “Big Bang” prequel spinoff “Young Sheldon” as CBS’ new comedy standard-bearer now that longtime primetime champ “The Big Bang Theory” is set to end its 12-season run in May. “We have a history of retiring shows at the end of their lives and grooming the next success,” Ianniello said. “Young Sheldon” was recently renewed for two more seasons.
Expanding All Access overseas: CBS is looking to expand All Access internationally and having some local content will be key. “As we go international we are not just going to have U.S. exported content,” he said. “The offering is more complete.” CBS is looking to grow beyond its foothold in Canada and Australia.
Looking ahead to the upfront: “We always approach the upfront with stability and consistency,” he said. Ianniello said there are no plans to dramatically change the ad load levels in CBS programming.