CBS Corp. will spend more than $8 billion on content this year as it looks to bolster its pipeline of programs for in-house platforms and outside buyers.
CBS executives touted the company’s investment in high-end content, plans to expand its streaming offerings — including the launch of a local news channel in Los Angeles this quarter — and its strength in advertising during its first quarter earnings conference call Thursday afternoon with Wall Street analysts.
Joe Ianniello, CBS president and acting CEO, said the Eye is committed to investing more in content amid the swings of the pay-TV market and the arrival of new contenders with deep pockets such as Apple. CBS plan to “invest more than $8 billion in programming positions us competitively with any player in the marketplace,” he said.
CBS’ $8 billion-plus content budget includes its spending on sports rights and licensing shows for CBS and Showtime from outside suppliers. CBS is increasingly leaning on the CBS Television Studio division to supply shows for the mothership networks and turn out shows for other outlets ranging from Netflix to Fox to the nascent Disney Plus.
As CBS builds out its CBS All Access platform with more originals and expanding it to overseas markets, Ianniello said the company would tackle the question of off-network sales to third parties on a case by case basis. Some shows lend themselves to staying entirely in-house as exclusives for CBS All Access while others may be better served by airing on an outside service. “We’re going to continue to be nimble and keep evaluating it franchise by franchise,” Ianniello said. With checks that come in from third-party networks, “we’ll take that money and reinvest it right back into our business,” he said.
CBS Interactive CEO Jim Lanzone detailed the growth of CBS All Access and the standalone Showtime streaming service. Combined, the services hit CBS’ target of 8 million subscribers earlier this year, two years ahead of schedule. Lanzone cited the combination of “rigorous business planning and financial discipline” in growing the service. “It does not require turning our business upside down to compete,” he said.
Ianniello said the growth trend for both services and uptake for CBS’ advertising-supported free streaming offerings including CBSN, CBS Sports HQ and ET Live are encouraging. The higher volume of original programming on CBS All Access this year — with marquee shows such as “Star Trek: Discovery,” “The Good Fight” and “The Twilight Zone” — should help with subscriber retention, he added.
“We feel even better today than we did last quarter about our ability to reach our target of 25 million direct to consumer subs in 2022,” he said. CBS is also eyeing more international markets, including territories in Western Europe and Latin America, for CBS All Access-style services, following launches in Canada and Australia last year.
Lanzone acknowledged that the market for streaming content is becoming crowded with companies with broader offerings. He cited CBS’ early entrance into the field with CBS All Access in 2014 and the internal expertise at managing massive tech platforms as a big advantage for a company that is smaller than most of its major rivals.
“There are a certain number of seats in this rocket ship taking off in this space,” Lanzone said. “If we play this right there’s definitely a seat for us on this ship.”
Lanzone said CBS will launch a 24/7 local news channel in Los Angeles this quarter, with Boston and San Francisco set to roll out later this year. The content will be produced out of CBS’ Los Angeles O&O. The first of CBSN’s local offshoots bowed in New York in December.
Chris Spade, CBS’ chief financial officer, said CBS’ earnings for the quarter were buoyed by strong advertising sales at the national and local level. Ad revenue for the quarter was up 19% to $2 billion, thanks to the one-two punch of CBS carrying the Super Bowl in February and the NCAA’s March Madness championship tournament.
“We expect 2019 to be a record year for advertising,” Spade said.
(Pictured: “The Good Fight”)