Affiliation Agreement Renewals Could Lead to Fights
Deals between CBS and its TV station affiliates that pay the network higher fees for programming have been completed smoothly and quietly, but that could change as larger station groups operating in larger markets renew their affiliations to the network, CBS CEO Leslie Moonves said at a Goldman Sachs investor conference Tuesday. “It’s become accepted, and rightly so, that when an affiliate is getting retrans, he’s getting it a lot because of prime time, David Letterman, 60 Minutes, the NCAA Tournament and the NFL,” Moonves said. “The affiliates are on board with that, they get that."
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However, “there may be some disputes as we head into the future if someone thinks we're overreaching or we don’t feel we're getting paid enough,” Moonves said. Most of its affiliation agreements with large station groups expire in 2014 and 2015, he said. CBS isn’t interested in helping its affiliates negotiate carriage agreements with pay-TV distributors and is largely seeking a fixed fee from them rather than a percentage of their retransmission consent revenue, Moonves said. “If someone is a good or bad negotiator, that shouldn’t affect what we get paid.” Because of the timing of all of CBS’s various affiliation renewals with TV stations and distributors, and its TV affiliates’ own varied renewal timelines with their distributors, it would be nearly impossible for CBS to step in and consolidate all those talks, he said. Still, CBS is invested in the health of its affiliates, Moonves said.
Because CBS owns and produces most of the shows it airs, it sees opportunity in the rise of online video, Moonves said. Video viewing habits will shift to the point where it won’t matter how the viewer is watching a show, he said. “Eventually, there is going to be a shift where more people will be watching online and that will be fine as long as the revenues match,” he said. “There will come a day in the not-too-distant-future when I'm not going to care whether you're watching CSI online, on Netflix, on CBS or TV.com, as long as I'm getting paid for it. An eyeball is an eyeball and we're going to get paid for it."
For now, CBS is careful not to do anything online that would hurt “the mothership” of the CBS broadcast network, Moonves said. That’s why CBS’s online distribution deals have excluded any shows that are still on the air, even past seasons of them, he said. The risk to the network “was one of the reasons we didn’t join Hulu,” Moonves said.
Though CBS’s news division isn’t a big profit center, Moonves said he wouldn’t consider it “a real network” without a strong news organization. CBS has held about a dozen conversations with Time Warner’s CNN about potentially partnering on news, he said. “It has never worked out, and I don’t know if it ever will,” he said. “It would make life a lot easier if we owned a cable news network,” he said. “The evening news having those bureaus across the world is a very costly proposition."
In local markets, CBS’s radio and TV stations are increasingly working together to improve their news product, particularly online, Moonves said. In Los Angeles, CBS consolidated the websites of its two TV and two news radio stations into a site that CBS hopes will become “more valuable than the LATimes.com,” he said. “It gets content from all four sources and it’s sold by salespeople from all four sources and it’s promoted across L.A.” CBS did the same online rebranding in 24 cities last year, he said. “This couldn’t have been done without the radio and TV stations being much more efficient in working together.”