CBS’ CEO Leslie Moonves
Whether or not there are price increases in the 2009 network TV upfront, the posturing season has begun. The CEO of at least one network — CBS — believes it will command price increases in this upfront, still six months away.
CBS chief executive Les Moonves told investors at a Citigroup media conference in Arizona today that CBS would get advertisers to pay more for ads in the next upfront, but said it was “way too early” to speculate on how big those increases would be.
Moonves said CBS’ position vis-a-vis the competition gave him the confidence to expect pricing gains. “Relatively speaking, we’ll be at the top of the list” of networks that advertisers will to do business with, he said, indicating that CBS is currently in first place in the key demographics and ahead of last year in terms of overall audience.
Moonves’ remarks contrast sharply with comments from the buying side on this year’s upfront. Tim Spengler, president of Initiative U.S., a unit of Interpublic Group, said recently, “Unless the pricing gets really reasonable, a lot of money will be sitting out of annual deals.”
Rino Scanzoni, chief investment officer for WPP’s GroupM, said he believes there will be a “significant contraction” in the amount of upfront dollars placed by advertisers.
But Moonves also acknowledged some slowdown in the sports marketplace, noting that sales for the upcoming NCAA basketball tournament, shown on CBS in March, were “a bit slower than expected.” The NFL, he said, “remains strong” and profitable. “The NFL, I’m pleased with,” he said.
Moonves’ remarks came on the same day that CBS announced the successful conclusion of a new retransmission consent agreement with Time Warner Cable, giving the No. 2 cable operator rights to carry the signals of CBS TV stations on its cable systems in exchange for fees.
Moonves would not provide details on the Time Warner transaction but said CBS was “on target” to achieve $250 million in profits from retransmission agreements over a four- or five-year period. He said the fees from Time Warner were “in the neighborhood” of what CBS wanted. The network recently cut a retrans deal with Verizon; it is currently in talks with Cablevision.
In the future, Moonves said, the network’s non-owned TV affiliates should be prepared to share whatever retransmission fees they are able to extract from stations with the network.
“We feel we deserve a piece of it since we provide them with the NFL” and many other costly programs, he said.
Moonves said he was pleased with recent Internet acquisitions the company has made, including C-NET and LastFM. Basically, he said, CBS has sold “slower growth” properties, including smaller TV and radio assets for $2.5 billion and reinvested the proceeds in “faster growth” Internet properties. “It was a way to become a major leaguer right away” in the online distribution business where CBS will exhibit increasing amounts of its content, he said.
