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CBS Eying $40 Million 'Miami' Payday from Netflix

12 Sep, 2012 By: Erik Gruenwedel

Network has licensed 7% of its primetime library to the SVOD leader

CBS is set to realize a $40 million payout by Netflix in the third quarter when the subscription video-on-demand pioneer begins offering episodes of canceled “CSI: Miami” to its 27 million streaming-only subs, the media company’s CEO told an investor group.

Speaking Sept. 12 at the Bank of America/Merrill Lynch 2012 Media, Entertainment, Communications Conference in Beverly Hills, Calif., Les Moonves reiterated the network’s strategy that it would only license programming to Netflix and other SVOD services that was no longer airing in primetime. The policy differs from other content holders that license past seasons of ongoing programming — including “Breaking Bad,” “Mad Men” and “Weeds” — to SVOD services.

Moonves said the $40 million from Netflix would be incremental to syndication revenue earmarked from the spin-off of the long running "CSI: Las Vegas" series. "CSI: Miami" aired in primetime from 2002 to this past May. Shows that go to Netflix do so at a pre-negotiated price, he said.

“Right now Netflix sees the results [from the licenses]. They see which of our shows works and which aren’t,” Moonves said, adding that CBS would be part of Netflix’s fourth quarter expansion into Scandinavia.

CBS, which has realized significant incremental revenue from SVOD services in the past year, was initially reluctant to license content to over-the-top Web-based video services, believing doing so jeopardized the network’s lucrative ad-based business models. To this day the network won’t license programming ad-supported Hulu (but it does to subscriber-based Hulu Plus).

Moonves said bluntly that networks licensing ongoing programming to Netflix aren’t in first place in the Nielsen ratings as CBS is. He said the main “buckets” of billions in revenue for CBS include ad-supported primetime TV shows followed by syndication and retransmissions.

“Those are all buckets that are potentially in jeopardy if you put your content out there too much and too available,” he said, adding that “rarer” fare is more appealing to licensees. Moonves said Netflix works on some serialized “soap operas” such as “Desperate Housewives,” allowing viewers to catch up on story lines. He said typical CBS programming is self-contained.

The CEO said other SVOD services are “circling the building” in search of license deals, which he said would likely mirror agreements with Netflix and Amazon. Moonves said he has heard that Intel is planning a streaming service, and expects to secure deals in the near future with Comcast’s Streampix SVOD service. 

“He who has the most content wins,” he said.

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