CBS, Showtime SVOD Subscriptions 'Well Ahead' of Plans, CEO Moonves Said
Users of CBS' twin subscription VOD services, CBS All Access and Showtime OTT, have each reached about 1 million subscribers, "well ahead of where we thought we would be this early in the game," CEO Leslie Moonves said. With the company's goal of 8 million SVOD subs by 2020, "we are confident that this will be easily achieved," Moonves said during the company's Q2 earnings call Thursday. The company is expecting "a significant bump" in All Access subscribers through its Star Trek: Discovery series to premier in January, as well as other original programming, and it's growing subscriptions for its stand-alone streaming Showtime service by staggering the launch dates of original series, he said. CBS expects another bump when a Twin Peaks sequel launches there next year, he said.
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The 2 million CBS SVOD subscribers was a shocking number since HBO Now likely has roughly 1 million subscribers and Sling TV 765,000, Wells Fargo analyst Marci Ryvicker said in a note to investors Friday. The numbers also legitimize the 8 million-by-2020 projections, she said.
The Showtime and All Access subscriber base is heavily Generation X and heavy consumers of content, with much of it coming from broadband-only households, Chief Operating Officer Joseph Ianniello said: "We don't think people cut [the cord] or switch" but add to existing SVOD subscriptions like Netflix. With Showtime having a cable subscriber base of about 24 million households, the move to add an SVOD option was to create easier access to Showtime, Moonves said. Currently, the two streaming services are sold separately, though the company eventually will create an SVOD package where they can be bought together at a discount, Moonves said.
CBS revenue for the quarter was $3.29 billion, up 2 percent, and net earnings at $423 million were up 27 percent. Ianniello said the company is on track to take in more than $1 billion in retransmission consent and reverse compensation revenue this year, with significant numbers of retrans and reverse comp agreements coming up for renewal in 2017, "giving us the opportunity to reset those deals to current fair market value." Retrans and reverse comp revenue was up 44 percent, he said. CBS also sees "big opportunities" for content licensing and distribution, with agreements likely coming soon on licensing of the Showtime brand, Ianniello said. Pointing to All Access carrying the NCAA tournament, Moonves said CBS hopes to obtain NFL streaming rights: "We're looking at it together."
CBS' affiliation agreement with Charter expires in 2017, though Ianniello said Charter's new scope, having bought Time Warner Cable and Bright House Networks, shouldn't make a big difference in retransmission consent fees: "I wouldn't anticipate any big swings either way." Ryvicker in her note called New Charter "a nonevent for CBS."
Moonves also said the company is readying to spin off its broadcast radio business, with CBS Radio filing the paperwork in early July for an initial public offering, "We are also continuing to talk about other potential alternatives."