CBS Takes Major Ownership Stake In Kapital Entertainment

What better way for a major broadcast TV network to show support for “premium TV” than to investment in those traditional TV producers who make it --- especially when digital services continue to yearn for more big TV content.

This what CBS is doing in a somewhat unusual deal for a controlling 50% ownership stake in independent TV production company Kapital Entertainment, which currently produces a strong comedy on CBS called “Life In Pieces.”

Kapital also has shows on Netflix (“Santa Clarita Diet”); HBO (“Divorce”), a joint venture with London-based Merman; and an upcoming drama on Showtime, “The Chi.” Kapital has also produce shows for Freedom and Nickelodeon.

The interesting part of the deal? Kapital can continue to produce for non-CBS networks -- competitors.  



All TV network-based media companies -- Fox, NBCUniversal, Disney-ABC, as well as CBS, with its Paramount TV unit --  sell to competition. No problem, here. If the TV show is a success, the media company still get benefits of license fees from their competitors.

The main difference is in-house production companies are home-grown business units -- entities which increasingly sell the majority of big prime-time TV shows to their parent networks, or sister cable networks.

All this seem to back CBS, and the position TV networks, that premium TV content is growing -- especially for still hunger, digital subscription video on demand services as well as new virtual digital pay services of TV networks.

Premium TV content -- virtually all prime-time TV shows -- not only commands big attention from TV viewers online, but for those advertising-supported digital sites, commanding the most premium advertising pricing.

Overall, those digital ad TV dollars are soaring. UBS media analyst Doug Mitchelson estimated last year digital video advertising for traditional TV companies was projected to rise 40% in 2016, getting to $2.1 billion, up from $1.5 billion in 2015. This would amount to 5% of all traditional TV advertising dollars.

Ask any digital media ad executive looking at buying premium TV content on digital sites. Many say the same thing: There’s not enough content.

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