CBS (NYSE: CBS) CEO Les Moonves began the call by touting the international expansion of its streaming video deal with Netflix (NSDQ: NFLX), as well as a recent Amazon (NSDQ: AMZN) video distribution arrangement. In Q2, the main Netflix streaming deal was credited with boosting CBS’ revenues, and Moonves hastened to add that the new Netflix international effort and Amazon will be reflected in Q3, suggesting that investors can expect continued growth for its Q3 results.
“People have said, ‘Who else is getting into the content game?’ and we like to say about the deals with Netflix and Amazon, none of those are current shows,” Moonves said during the call. He then expressed interest in Dish Network’s plans to acquire content for streaming, as well as similar plans from Apple (NSDQ: AAPL) and Google (NSDQ: GOOG). “The world is getting bigger and we have content to fill it.”
We said 2012 will shoot for a goal of $350 million in retrans fees, with the $600- to $700 million in the next three- to five years. “We continue to replenish our library and that’s what we’ve been able to do successfully,” Moonves said. “We have CSI shows that are not apart of the streaming deals. But one day they will. Our library is astronomical, and it comprises the old Paramount library, the old Aaron Spelling library and others.”
With investors increasingly worried about a double-dip recession, Moonves said that upfront demand and scatter demand is still much higher today than it was three years ago. “We’ve been through a tough couple of days, but we’re not seeing any of the doom and gloom from three years ago,” he said.
As the digital distribution market develops, one analyst asked if CBS thinks that a fixed-fee pricing model that it did with Netflix and Amazon will hold, or will coming arrangements be based more on a per-subscriber/user basis?
“All these deals are different and the negotiations will evolve as the business evolves,” said CFO Joe Ianniello. Moonves then added, “It’s important that Amazon pay us upfront and that we let them grow their subs. It’s new business model and we feel it works best for us to be paid first.”