CBS has had a pretty successful run over the last few years, ranking as the top broadcast network and owning a successful pair of online video properties in CBS.com and TV.com. But just a week after the company acquired Clicker.com and named its CEO as head of Interactive, TV.com head Anthony Soohoo announced that he would be stepping down from his position, according to Media Memo. Which leads us to ask: With a new boss taking over CBS Interactive and the general manager of CBS’s online entertainment division departing, will the company’s digital strategy change?
In many ways, CBS has been a sort of black sheep among networks online. A few years ago, while NBC and Fox were busy creating Hulu as a destination for long-form TV episodes on the web, CBS resisted putting full episodes online, instead using its CBS Audience Network as a marketing vehicle by distributing short-form clips around the web. And when it did put full episodes on the Web, it didn’t join the Hulu experiment, resisting the equity and ad share split that the other networks embraced and relying on its own CBS.com and TV.com properties instead.
Even over the last year or so, CBS has acted separately from the other broadcasters: While Hulu and ABC created native apps for the iPad, CBS said it would make its programming available through the tablet’s browser instead. And when Fox and ABC announced their shows would be part of Apple’s 99-cent rental scheme on the Apple TV, CBS also held back.
Of course, as head of an online video search and discovery startup, new Interactive chief Jim Lanzone likely has his own opinions about content distribution, and how CBS should make its shows available online. But when we interviewed him soon after his appointment had been announced last week, Lanzone said his first order of business would be to understand how the company got to where it was and why it made the decisions it made.
Whether or not CBS shows will ever be on Hulu has been one of the major questions for the site ever since it launched. While the online video startup was able to secure content from the three other major broadcasters with a mix of equity and a rev share split, CBS held out and chose to sell its own digital ads on its own digital properties.
In hindsight this looks like a smart decision: While Hulu touts a very successful ad delivery platform, the amount of money it’s making is still tiny relative to the size of the overall TV market. And CBS has been pretty clear all along that it doesn’t want to share revenues with Hulu, but would prefer an upfront licensing deal like the one it recently struck with Netflix. That deal, which primarily brought older content like back episodes of Star Trek and Cheers to the subscription streaming service, was reportedly valued at $200 million. Considering Hulu booked “only” $260 million in revenues last year, it’s unlikely that the startup would offer a similar deal, especially for library content.
Furthermore, although CBS has taken a slightly contrarian approach to the other broadcasters, it’s difficult to argue with the actual results: CBS remains the Number 1 broadcast network, due to hits like The Big Bang Theory, the CSI franchise and NCIS. And, as Soohoo wrote in his farewell memo, entertainment revenue has increased some 700 percent and CBS.com has been the top-ranked network site for more than two years.
In part, CBS’s success in the traditional TV realm is one reason why it’s been able to go it alone online. It’s had the leverage to hold out and just say no when Hulu and Apple have come calling. But the network’s strategy also poses an interesting question for other content owners: Has CBS’s broadcast ratings held up because its not made its shows widely available online? Or are its online properties successful because its broadcast lineup is so strong?
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