March 17, 2016
During an investor day in New York on Tuesday, CBS chairman and CEO Les Moonves unveiled the network’s five-year business plan, which intends to ramp up business online and overseas, and cash in on retransmission fees in order to increase overall revenue by $3.75 billion. To help achieve its goal, the company plans to reach 8 million subscribers for its OTT services — CBS All Access and Showtime streaming — and add another 4 million subs for its skinny bundle packages. Sources also indicate that CBS has expressed interest in adding Starz to its cable portfolio.
According to The Wrap, “CBS identified four pillars to reach its goal for $3.75 billion in annual additional revenue: retransmission fees and reverse compensation, its own over-the-top services, international deals for its content and compensation from skinny bundles as well as advertising on delayed viewing.”
CBS predicts retrans and reverse comp would account for $1.7 billion yearly by 2020. The company is looking to add $800 million from OTT, another $800 million by licensing content internationally, “and $450 million from skinny bundles and getting paid for delayed viewing, through things like inserting targeted ads,” explains The Wrap.
Meanwhile, Starz is said to be one of several content companies CBS has been considering. The premium cable network was put up for sale in September 2014 and was recently in merger discussions with Lionsgate.
While Moonves has suggested in the past that he is comfortable moving forward with CBS and Showtime, “at the right price many might like the idea of taking on HBO and digital competitors including Netflix, Amazon Prime, and Hulu by consolidating Showtime with Starz,” Deadline points out. “The flagship Starz channel has 24 million subscribers and its Encore suite has 32 million.”
In New York this week, Moonves also indicated that the company is exploring strategies looking forward that could include selling or spinning off its radio division, which currently touts 117 stations and 70 million listeners across 26 markets. Hubbard Radio and Entercom Communications are reportedly among the potential buyers.
“The decision marks the end of an era and highlights the waning influence of commercial radio, which is no longer considered a growth industry,” reports the Los Angeles Times. “Young adults spend more time listening to digital music files, podcasts and subscription Internet radio services such as Spotify and Pandora. The shift has prompted major advertisers, including car dealerships, wireless phone companies and financial services firms, to steer more of their marketing dollars to digital platforms.”