How CBS And Other Broadcasters Really See Battles Over Retransmission Fees

Viewers of Time Warner Cable were pissed they could not get CBS or Showtime. But, for many, there wasn’t a clear picture about what the real battle was about-- until the big “aha” digital moment.

That happened when CBS watchers tried to get CBS and Showtime programming online -- and weren’t able to access that programming. Aha! While big retransmission revenues seemed important, digital transmission of shows now and in the future seemed to be the key.

Savvy TV executives get kudos for thinking about the long term in making deals.

Les Moonves, president/CEO of CBS Corp., said as much on CNBC. For the foreseeable future, big broadcast networks -- and their associated studios -- remain dominant providers of TV shows. No surprise here that they want to control their content, no matter where it plays on any digital device or service. And key here was Moonves saying that live streaming or other digital video transmission of its shows “will be the same as they are on the network” in terms of advertiser pricing in next three to five years.



Right now, the average unit price for a 30-second prime-time broadcast commercial is around $115,000, a price that has dropped slowly over the last few years.

But while the price per thousand viewers (CPM) for any premium video is higher than for traditional TV, total out-of-pocket pricing is much less. Five years from now, it may be a different story, especially if a significant number of viewers make the shift to streaming.

Sure, there might be parity between what an advertiser gets via digital streaming and via traditional TV, but the total unit pricing for the former might be only 60% of today’s average TV commercial price. Is that good news? Factor in other TV business formulas, like revenue from other digital revenue platforms -- especially non-advertising related revenues – that could benefit CBS and other broadcasters.

The business press has been focusing on the big financial take of CBS moving up from around 50 cents per subscriber per month to $2 a month from Time Warner Cable, Verizon, and others.

From a public relations move, that seems easy:  CBS doesn’t charge consumers directly for its programming; Time Warner Cable that sends a bill (and perhaps one that includes many channels customers don’t want).

Where are the financial battles to come? Maybe less so from the places you might think like carriage deals. For CBS it might be more in convincing advertisers to pay revenue increases of their own.

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