CBS CEO Les Moonves is known to occasionally drop pieces of information that he’s not supposed to on his company’s earnings calls, and this quarter was no exception. When asked about CBS’s appetite for striking deals with new streaming providers that might not have the money to pay cash upfront to license its content, Moonves said that CBS had decided against joining an Apple TV service because it was based on an ad split.
Apple had long been rumored to be working on a subscription streaming service that would aggregate content from multiple TV networks and compete against more traditional cable and satellite services. That product ended up never coming to market, as Apple was apparently unable to convince enough content providers to join. But no one had publicly confirmed that such an offering was actually in the works until today.
The decision not to join the effort follows CBS’s philosophy of getting paid upfront licensing fees for syndication of its content online, as opposed to partnering on revenue-sharing agreements. It’s one reason, for instance, why CBS never followed ABC, Fox and NBC in joining Hulu, and why it seems unlikely to do so in the future.
Now that decision seems to be paying off, as CBS and The CW, its joint venture with Time Warner, are striking big-money licensing deals with streaming providers that are contributing heavily to its top line. Earlier this year, CBS struck deals with both Netflix and Amazon to make classic library content like Cheers and The Wonder Years available on their streaming services. More recently, The CW has licensed its shows out to Netflix and Hulu in deals that Moonves said today would turn the network from a “money loser for CBS to a profitable venture.”
In both cases, CBS received lots of guaranteed money for streaming rights. In his prepared statements today, Moonves said CBS was receiving “hundreds of millions of dollars” from streaming providers like Netflix, Amazon and Hulu, and that there were potentially more deals in the works. As consumer demand for streaming content continues, Moonves said he feels good about being able to make significant money from online viewership year in and year out, regardless of which online distributor wins.
Moonves’ Apple comment isn’t the first big gaffe he’s had over the past year. On CBS’s first-quarter earnings call, Moonves mentioned working on a deal with Netflix to license CBS shows for distribution in Latin America, a full month before Netflix officially announced its streaming service would be expanding to that region.