Tuesday, December 15, 2015

CBS Corp. (CBS) comments [CEO Leslie Moonves] from 43rd UBS Conference (12/07/2015)

43rd Annual Global Media and Communications Conference
CBS Corp. (CBS)
Speaker: CEO – Leslie Moonves
Tuesday: 12/07/2015

  • Goals and targets? Have a lot of initiatives. Last couple of years been more disruptive than any part of my career. This year – established ShowTime OTT and CBS All Access. Success for us is (1) Content, because even if you can distribute it well, if you have bad content people won’t watch. CBS is poised to be successful no matter how people get there content. Skinny bundle, they wont succeed without CBS. We would get paid more on skinny bundle. On A-la-carte, with CBS All Access, we will get paid even more. People can’t live without CBS – football fans, Stephen Colbert fans, etc.
  • Preference for distribution 3-5 years? Know its shifting, not sure how fast it is shifting. Every economic way you get CBS works for CBS. If the world stays where it is today, with retransmission fees and reverse compensation fees, our numbers are going up. $1 billion for 2016, $2b by 2020 in retrans and reverse comp. It will shift, though. Skinny Bundles will become more important, especially to millennials. We offer something for everybody, we will be there. All Access, maybe turn to no advertising for $9.99 per month. We feel well positioned for the future.
  • 2015 finish to year? Terrific. Distribution systems paying us more and more. Advertising is good. Q3 scatter was good, Q4 is better. 2016, we have extra AFC playoff game, Super Bowl, plus political advertising. The more the Republicans bicker, the better for us.
  • Drivers for 2016 besides what you’ve talked about? Showtime, CW, CBS content all has done well. All new shows have picked up. Homeland, Affair, other shows doing well. We will be #1 broadcast network for 13 our of 14 years. With advertising scatter this strong, you know in May it will be this strong. We took in less in volume by 4-5%, the ad scatter – advertising could've paid 20% less at one point, but…Our CRO is bullish on advertising.
  • Super Bowl sold out? Loaded question. No. Demand is high. Sold most spots for very high prices. As you get closer to game, some advertiser just HAS to be in Super Bowl. Or some movie producer will spend on advertising.
  • Any update on local TV or radio? Local TV and radio is up low single digits, very pleased about it.
  • How is new TV season been? Been a tipping point. We’ve had no home runs out of the box, which is unusual. Lots of singles and doubles. Any “Survivor” or “CSI”, no, but many that can sell in the future. Ratings have been slightly down, but after-market has been up considerably. We need better measurement of ratings as viewing shifts.
  • Shifts of programming strategy? Not really. Hasn’t been in 20 years. We’ve had great success with procedural crime, but we try other genres, Super Girl, Code Black, Limitless. Very pleased with how we are doing.
  • Competitor shows or scheduling that was surprising? Not really, no. Everyone has certain amount of successes. Empire has slipped some but still going great. NBC has some good stuff. Network TV is still strong.
  • Start with marketing, hope to build audience. NFL is potentially shopping Thursday night football. CBS has Sunday night for NFL for 9 more years. NFL is looking at a lot of ways to distribute. Looked at digital, for example with London game. Remains to be seen. Hope CBS continues with Thursday, we will pay a good price, but not something stupid.
  • Primetime – still about 50% of adv. Revenue? Last few years, CBS has transformed our-self. Day time now makes >$100m. CBS This Morning, growing tremendously. Late Night, changed both hosts, Colbert is  a lot more profitable than Letterman. Look across whole schedule, feel very good, no noticeable weaknesses.
  • Look at post-Super Bowl shows, a lot of bad shows right afterwards. We’ve put on Undercover Boss, Survivor. This year will be Colbert, as we have made an investment in the show.
  • Audience – how much measurement is missing in ratings? Good news for us, is something is missing. Not getting fully counted. There is real upside to this. Network is very profitable. Viewers are shifting all over the place, CBS not getting paid for every viewer. As measurement gets more precise, and it will, we will get paid more. Overnight ratings mean very little now. C3, C7, C30 should also come into the equation. If you watch an episode a month from now, will it be less effective then? Probably not, shows ads should count. Also, dynamic ad insertion will be strong. This is getting bigger and bigger and viewership moves beyond “live”.
  • Opportunities holding back on? CBS is thinking about  the future, how it will be 1,2, many years from now. Still, we run a public company. Need earnings, have to show earnings. We are cautious about what we invest in. Streaming investments have been good. Disney bought Maker Studios for $500m - $1 billion, they are bigger than us. They have Star Wars, we don’t. Have to handle the game a bit differently.
  • Retransmission - $1 billion in 2016. Affiliate renewal cycle? Had a few big ones in 2015, each year they go up. Not lumpy. No major retrans deals in 2016. Some of previous deals the price increases kick in in 2016.
  • CBS All Access, ShowTime OTT – investments had been made 3-4 years. Relationships with distributors are generally good, some good days, some not so good.
  • CBS All Access – at 85% for distribution, one distributor not in, but will be in shortly.
  • Showtime – doing more stuff like Hulu. People ask for predictions where it will be 3 years from now, not sure.
  • Star Trek – do you sell to Hulu, Netflix, Amazon? There are millions of Star Trek fans who will sign up for CBS All Access just for this show.
  • Going to war with Time Warner Cable (TWC) wasn’t fun, but we like the outcome. Noticed they went up for sale not long after. Got calls from Congress and FCC about why we didn’t get along, wasn’t fun. Made future conversations easier, though.
  • Verizon has put out Skinny Bundle, Sony is experimenting in it. Makes sense to get a handful of major cable networks, charge much less. It is inevitable, not sure when. Apple started this process and then slowed down. Higher sub fees will be the result. Sling TV doesn’t have any major networks. We would consider something if paid appropriately.
  • CBS.com – free to air? Yes, but less content than All Access. Has less shows. Will inevitably be molded into All Access.
  • We have no great desire to join Hulu. We want to have more control of our content.
  • Spectrum incentive auction – range on outcomes? Can’t be specific, have 28 TV stations, 13 are CBS, won't touch these, The independents, the CWs, would consider. The numbers we have seen are rather high, but it’ll be an auction. They put a number in Long Island TV Broadcast that we bought a few years ago for $55m and the first numbers they said were its worth $490m. We said “we’ll take it”. Now, that won’t be the final price for the NY spectrum. 4-5 markets we will get into it in a serious way. Will look carefully at. Maybe a couple hundred million dollars coming our way, when all said and done.
  • SVOD revenue – growth? We have good relationships with SVOD players. Netflix (NFLX) is not the anti-Christ, we enjoy the relationship. They buy our content, but also a competitor as they develop content, too. We do a lot of business with Amazon, Hulu, and growing internationally as well. A lot of local international SVOD players. Now 6-7 players for our product internationally, and the numbers will go up. Took Star Trek and kept ourselves instead of selling to Netflix.
  • Netlfix isn’t the only game in town with Hulu and Amazon there as well.
  • TV production  - too much TV? Don’t believe so. Maybe too much crap television. There is some difficulty in the talent pool but the best rise to the top.
  • CBS  - don’t own a lot of international licensing; domestically, sell to cable. Any other buyers? A lot more competition with SVOD players. By and large, the off-net stuff is performing well. Sometimes will see same time a SVOD or cable deal.
  • Showtime in 24 million homes, about 80 million left. $10.99 you get Showtime. Showtime OTT – won’t say the amount of subs. We will disclose the number when Netflix reveals how many people watch House of Cards.
  • Balance sheet, right level of buybacks? We are not heavy in debt, have buyback for another 1.5 years in similar level we have done. We have reinvested back in business, in premium content.

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