Verizon will pay CBS about 50 cents per subscriber for the right to carry its TV stations on Verizon's FiOS TV and is also in talks with AT&T. Securing payment for the right to carry CBS programs has been a priority for CBS CEO Leslie Moonves since his company split from Viacom in January and he hopes that this will put pressure on cable operators to pony up for its programming. As marketers shift more ad dollars from TV to the Internet, CBS sees subscriber fees as important to revenue growth. Moonves says that subscriber fees could pump hundreds of millions of dollars into the company. CBS' strategy is to capitalize on the increasing competition between cablecos and telcos to deliver TV to people's homes.
Verizon's FiOS TV reaches only about 1.3 million people in seven states and the company needs TV content to keep growing. The deal gives Verizon the right to carry CBS' 18 owned and operated stations to reach about 35 percent of the U.S. Forrester Research media analyst Josh Bernoff says that "Verizon is stuck. They need content, and they don't have much of a negotiating position." Analysts question how much leverage such deals will give CBS when agreements with cable companies start to expire next year. In any case, this may end up increasing the cost for the subscriber.
For more on this deal:
- check out this article from The Wall Street Journal (sub. req.)
PLUS: EU regulators approved a new Time Warner-CBS venture in which their respective WB and UPN networks will combine to form a new broadcast network called CW. Article