Super Bowl LIII, Tax Credit Help CBS Offset Growing OTT Video Content Costs

Advertising revenue from February’s Super Bowl LIII broadcast and a tax benefit contributed to CBS Corp. May 2 reporting a 140% increase in first-quarter (ended March 31) net income to $1.58 billion, compared with $511 million in net income the previous-year period. Revenue increased 11% to $4.17 billion, from $3.76 billion for the prior-year period.

CBS said it received a “discrete” tax benefit of $768 million from the  reorganization of the company’s international operations.

The company said direct-to-consumer video subs, which include CBS All Access and Showtime OTT, grew 71% to 9 million combined subscribers, from 5.3 million in 2018.

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“We are seeing strong growth here in the second quarter thanks to premium original series such as ‘The Twilight Zone’ on CBS All Access and ‘Billions’ on Showtime OTT,” acting CEO Joseph Ianniello said in a statement. “At the same time, we also continue to produce more and more content for a variety of buyers, including Amazon, Apple and Netflix, which will debut ‘Dead to Me’ from CBS Television Studios tomorrow.”

Increased content production for Showtime OTT contributed to the cable networks business unit (which includes Showtime OTT) reporting a 26% drop in operating income to $175 million from $236 million last year. Revenue dipped 3% to $552 million from $571 million last year.

The entertainment unit, which includes CBS All Access, CBSN and other streaming services, reported a 9% increase in operating income to $530 million from $486 million for the same prior-year period. Revenue increased 15% to $3.18 billion from $2.75 billion.

CBS Eyes 25 Million Combined ‘All Access,’ ‘Showtime OTT’ Subs by 2022

CBS is projecting 25 million combined subscribers by 2022 for over-the-top video services CBS All Access and Showtime OTT. The guidance follows the two subscription streaming services reaching 8 million combined subs at the end of 2018 – two years ahead of schedule.

All Access launched in 2014 for $5.99 monthly with ads ($9.99 without) featuring original, primetime and catalog CBS programming online and streaming devices without long-term contract.

Showtime OTT bowed in 2015 featuring the premium channel’s original content and third-party movies for $10.99 monthly fee.

“We are generating significant momentum with our direct-to-consumer platforms, which provide a great return-on-investment and represent one of our most powerful long-term growth drivers,” Joe Ianniello, acting CEO said in a statement.

Indeed, growth in Showtime OTT subscribers through Amazon Channels helped drive cable networks revenue up 8% to $551 million for the fourth quarter (ended Dec. 31, 2018) from $508 million in the prior-year period. Other revenue drivers included higher international licensing sales, and revenue from the Deontay Wilder/Tyson Fury pay-per-view boxing event in December.

Operating income of $193 million decreased 7% from $207 million for the same prior-year period, reflecting an increased investment in programming.

Entertainment segment revenue — which includes All Access — dipped 1% to $2.83 billion from $2.86 billion, reflecting 14% lower content licensing and distribution revenue, mainly as a result of the timing of international licensing sales and several large domestic sales in the fourth quarter of 2017.

Affiliate and subscription fees grew 17%, led by growth from All Access and higher revenue from station affiliation fees and virtual MVPDs. Advertising revenue increased 2%, reflecting revenue from Network 10, which was acquired in the fourth quarter of 2017.

This increase was partially offset by the absence of the broadcast of “Thursday Night Football” in 2018. Underlying CBS Network advertising for the fourth quarter of 2018 increased 2% from last year’s fourth quarter.

Entertainment operating income of $438 million for the fourth quarter of 2018 decreased 6% from $465 million for the same prior-year period, primarily reflecting the lower revenue and an increased investment in content and digital initiatives. These decreases were partially offset by the absence of programming costs associated with “Thursday Night Football.”

 

 

CBS Launching ‘ET Live’ OTT Video Service

CBS Oct. 31 announced the launch of ET Live, an ad-supported free 24/7 over-the-top video streaming service  based on the long-running entertainment newsmagazine “Entertainment Tonight.”

ET Live will deliver 24/7 programming covering the latest developing entertainment stories, breaking news, celebrity interviews, features, and behind-the-scenes and red carpet coverage, as well as celebrity fashion, beauty and lifestyle trends.

“From CBS All Access to CBSNand CBS Sports HQ, we are dedicated to bringing consumers best-in-class streaming services,” Rob Gelick, EVP and GM, CBS Entertainment Digital for CBS Interactive, said in a statement. “ET Live is a natural expansion of our strategy and expertise in this area.”

ET Live will feature originally produced programming hosted by Lauren Zima, Denny Directo, Cassie DiLaura, Tanner Thomason, Jason Carter and Melicia Johnson. In addition, “ET” hosts Nancy O’Dell, Kevin Frazier, Nischelle Turner and Keltie Knight will regularly appear in segments to promote what’s coming up and exclusive to the on-air broadcast.

At launch, ET Live is available online at ETLive.com, via Android and iOS devices through the ET Live app, on Apple TV, and on Amazon Fire TV, with additional platforms coming soon.

In addition, ET Live will be integrated into the CBS All Access subscription service’s live feed across additional devices and platforms, giving users the ability to toggle between their live local CBS feed, CBSN and ET Live’s coverage. ET Live will also be available as a feed within CBSN, CBS’ 24/7 streaming news service, across additional devices and platforms.

Richard Parsons Resigns as Interim Chairman at CBS, Citing Health Issues

Richard Parsons has resigned from the CBS board of directors, including his position as interim chairman.

In his place, CBS named veteran entertainment executive Strauss Zelnick to assume Parsons’ positions – garnered following the resignation of Les Moonves due to allegations of inappropriate workplace behavior. The appointment follows a unanimous Oct. 21 decision by the CBS board.

The 70-year-old Parsons, former chairman/CEO of Time Warner who once also served as interim CEO of the NBA’s Los Angeles Clippers franchise after the league banned (now former) owner Donald Sterling for life for racism, continues to deal with previously diagnosed health issues related to multiple myeloma, a blood cancer related to lymphoma and leukemia.

“As some of you know, when I agreed to join the board and serve as the interim chair, I was already dealing with a serious health challenge – but I felt that the situation was manageable,” Parsons said in a statement. “Unfortunately, unanticipated complications have created additional new challenges, and my doctors have advised that cutting back on my current commitments is essential to my overall recovery.”

Zelnick, 61, who has held management roles in all forms of entertainment, including recorded music at BMG Entertainment, motion pictures and television programming at 20th Century Fox, international television distribution at Columbia Pictures, and chief executive of Take-Two Interactive Entertainment, oversees a management team led by interim CEO (and former CFO) Joe Ianniello.

 

 

CBS Ups Showtime Boss David Nevins to Chief Creative Officer

CBS Corp. Oct. 18 announced the promotion of David Nevins, CEO of Showtime Networks, to corporate chief creative officer, effective immediately. Nevins, who remains CEO of Showtime, was also promoted to chairman of the premium channel.

He will be based in Los Angeles, reporting to Joe Ianniello, acting CBS CEO, in New York.

In his expanded role, Nevins will be responsible for oversight of programming, marketing and research across CBS Television Studios, the CBS Television Network’s Entertainment division, Showtime Networks and, in conjunction with CBS Interactive, programming for over-the-top video platform CBS All Access.

He will also oversee CBS’ interest in The CW, a joint venture between CBS and Warner Bros. Entertainment. Julie McNamara (CBS All Access), David Stapf (CBS Television Studios), Kelly Kahl (CBS Entertainment), George Schweitzer (Marketing) and Radha Subramanyam (research) will continue in their leadership roles in these respective areas.

“David has a brilliant creative mind and an impressive track record of success at Showtime and in the entertainment industry,” Ianniello said in a statement.

As chairman/CEO of Showtime, Nevins manages the company’s programming, distribution, business development, finance, marketing, creative, digital media, scheduling, research, acquisitions, network operations, home entertainment, business affairs and corporate communications teams, as well as Showtime Sports and Smithsonian Networks.

Under his leadership, Showtime original series include critically acclaimed “Homeland,” “Billions,” “Ray Donovan,” “Shameless,” “The Affair,” “SMILF,” “Patrick Melrose,” “Kidding,” “House of Lies,” “The Circus,” “The Chi,” and “Twin Peaks.”

The first Showtime project greenlit by Nevins – “Homeland” was the recipient of Golden Globe and Emmy Awards for “Outstanding Drama Series,” as well as a Peabody Award.

During his tenure, Showtime has also become the industry leader in live boxing broadcasts.

Walmart Working with Former Studio Chief Nancy Tellem in New Joint Venture

Walmart desperately wants to bridge the entertainment and e-commerce divide with Amazon.

The world’s largest retailer Oct. 11 announced a strategic entertainment joint venture with Eko, a developer of interactive video technology. The pact includes plans to develop original, interactive content that Walmart claims will help it connect with customers in “new and more meaningful ways,” with the goal of driving deeper and more frequent engagement.

The content, which could range from cooking shows to interactive toy catalogues, will go beyond the basic personalization available today, allowing viewers to participate in and shape stories as they are being told, according to Walmart.

The joint venture – dubbed W*E Interactive Ventures – expands Walmart’s entertainment ecosystem. The retailer already has a longstanding physical and digital video presence, through stores, websites, the digital platform Vudu.com and the recently launched eBook platform, Walmart eBooks, with Rakuten Kobo.

“Our partnership with Eko will help us accelerate efforts to deepen relationships with customers and connect with new audiences in innovative ways and is one part of an overall entertainment ecosystem we’re building,” Scott McCall, SVP of entertainment, toys and seasonal, Walmart U.S., said in a statement.

Since 2010, Eko has pioneered the future of entertainment, alongside partners like Sony Pictures Entertainment and MGM Studios. Eko has received prior funding from Sequoia Capital, Intel Capital, Warner Music Group, Samsung, Walmart, and others, and has more than 15 patents for its technology. In connection with the joint venture, Walmart has agreed to participate in Eko’s next funding round.

“The future of video entertainment is interactive, and this joint venture is a huge step towards bringing this future to life,” said Yoni Bloch, CEO of Eko. “In 2018, all forms of media are personalized except for live action video.

The partnership will be led by Bloch, with input from several industry experts. Tribeca Productions co-founder Jane Rosenthal will serve as strategic advisor. Rosenthal, producer of films such as Meet the Parents, Meet the Fockers, About a Boy (film and series), Wag the Dog and the upcoming Scorsese film The Irishman, helps create a bridge for both established and emerging artists looking for an outlet for their work.

Nancy Tellem, chief media officer and executive chairwoman of Eko, will serve on the board of the joint venture. Prior to joining Eko, Tellem spent more than 25 years in television including time as president of CBS Network Television Group.

Tellem most-recently spearheaded Microsoft’s short-lived attempt at creating original TV shows and movies at shuttered Xbox Entertainment Studios.

“During my career in broadcast television, I’ve seen how traditional media has been transformed by technology and have long believed that technology would be the key to creating more engaging entertainment experiences,” said Tellem. “Audiences are hungry for immersive entertainment, and storytellers are embracing this new technology in creating a new type of story narrative that deeply engages the viewer. Now is the time for Eko and interactive content to take center stage.”

Former Time Warner CEO Richard Parsons Named CBS Interim Chairman of the Board

CBS Sept. 25 announced it has named former Time Warner CEO Richard Parsons interim chairman of the board of directors – replacing chairman/CEO Les Moonves, who exited the company following allegations of inappropriate behavior in the workplace. The board unanimously approved the appointment, which was recommended by the board’s nominating and governance Committee.

“Dick Parsons has a combination of deep industry knowledge and unmatched corporate and board experience,” Candace Beinecke, chair of the nominating and governance committee, said in a statement. “We are fortunate to have Dick in this leadership role.”

Parsons, who stepped down as CEO of Time Warner in late 2007 – replaced by Jeff Bewkes  – has worn many corporate hats (including Citigroup) in a lengthy career that included a stint as interim CEO of the Los Angeles Clippers NBA franchise after former owner Donald Sterling was forced out following allegations of racist behavior.

CBS also announced that Bruce Gordon and William Cohen, who have served on the board of since CBS became a stand-alone public company in 2006, have decided to step down from their posts to focus on other personal and professional priorities. The board unanimously adopted a resolution to express its thanks and appreciation to Gordon and Cohen for their long and dedicated service to CBS, and to wish them well on their future endeavors.

CBS Says It Will Investigate Sexual Misconduct Claims Against CEO Les Moonves

The board of directors at CBS Corp. July 27 said it will investigate claims of sexual misconduct by longtime CEO Les Moonves disclosed in an expose by Ronan Farrow in The New Yorker.

Farrow’s article  alleges Moonves engaged in unwanted touching and kissing of female subordinates over the past 20 years.

Read Ronan Farrow’s article in The New Yorker here.

“All allegations of personal misconduct are to be taken seriously,” the board said in a statement. “The independent directors of CBS have committed to investigating claims that violate the company’s clear policies in that regard.”

The board noted the timing of the expose coinciding with CBS’ ongoing legal battle with corporate parent National Amusements, headed by Shari Redstone and her ailing father Sumner Redstone.

“While that litigation process continues, the CBS management [which includes Moonves] has the full support of the independent board members,” said the statement.

Farrow won a Pulitzer Prize for another expose that outed Harvey Weinstein’s long history of sexual harassment. The story led to Hollywood’s #MeToo movement, and subsequent criminal indictments against Weinstein.