CBS Corp. chief executive Les Moonves told investors that his broadcast network has already hit $1 billion in annual revenue from retransmission and reverse-compensation fees, a year ahead of the media company's anticipated timeline for the benchmark.
And, in what seems like a counter-intuitive agenda, Moonves simultaneously touted his decision to run the next highly anticipated TV-series reboot of Star Trek exclusively on CBS' All Access OTT platform. That action will leave the pay-TV ecosystem out of the equation, and could impact CBS' stated goal of scoring more than $2 billion in retrans revenues annually by 2020.
Star Trek fans, Moonves said, "are some of the most passionate fans in the world, and we can see millions of them joining All Access, where they can watch these new episodes wherever they want and whatever they want and on whatever device they want to use, which is increasingly consistent with how younger viewers are watching our shows." Moonves' comments during the company's third-quarter earnings conference call were plied to transcript by Seeking Alpha.
The executive said CBS' broad-skewing, highly rated programming will render its networks as essential, even as pay-TV operators are forced to reduce the size of their program bundles.
"However viewers choose to consume their content, from the traditional bundle to the skinny bundle to individual ones chosen à la carte like All Access and Showtime OTT, CBS is positioned to succeed," he said.
And despite disintegration of cable, satellite and telco video revenue streams from online competition, he expects broadcast retransmission fees to keep right on growing for CBS.
"We will exceed our target of $2 billion by 2020," he said. "Plus, there is a very good chance that one or more major media or tech companies will launch a new skinny bundle next year, leading to significant incremental subscription revenue for us. And this is in addition to the continued growth of All Access and Showtime OTT."
For the third quarter, CBS reported a 1 percent rise in operating income to $753 million. Earnings per share of $0.88 beat analysts' forecast of $0.81.
"Unlike many of its media peers, CBS is relatively sheltered from skinny package sub losses, with the network included in all basic tiers and a likely partner for most OTT providers," said Jefferies analyst John Janedis in a note to investors.
Interestingly, other TV broadcasters are also supportive of CBS' decision to keep its upcoming Star Trek TV series on its All Access OTT platform. Executives from local TV station owner Nexstar said they expect the move will be positive.
"If that increases the take rate to CBS All Access, in our marketplaces, then we participate financially with CBS, because we're the streaming -- it is our local video that is streamed on a market-by-market basis," explained Nexstar CEO Perry Sook, according to a Seeking Alpha transcript of his comments on the company's third-quarter earnings conference call. "So I'm not sure that it is a game-changer, but I think it could be incrementally positive to us, because it would promote the distribution of CBS All Access."
Analysts with investment firm Jefferies noted that Nexstar's third quarter revenues from retrans deals grew 15 percent quarter-over-quarter to $80 million.
- read this Seeking Alpha CBS transcript
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