CBS Corporation (CBS)

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CBS Corporation (CBS)

February 26, 2013 2:00 pm ET

Executives

Armando Nunez - Chief Executive Officer of CBS Paramount International Television Division and President of CBS Paramount International Television Division

Analysts

Benjamin Swinburne - Morgan Stanley, Research Division

Presentation

Benjamin Swinburne - Morgan Stanley, Research Division

All right. Good morning. So continuing along in our media trend here over the last couple of hours, I wanted to mention that the man to my left is not Les Moonves, but is in fact, Armando Nuñez, the President of CBS Studios and CBS Distribution. Les, unfortunately, is down with the flu suddenly, as of last night, and could not make the trip up to L.A. So we're really fortunate Armando could pitch hit and come rescue us here.

Armando Nunez

Happy to be here. I'm sorry I'm not Les, but I'll do my best.

Benjamin Swinburne - Morgan Stanley, Research Division

Right. And Les, if you're listening, we hope you feel better soon. Armando, thanks for making the trip.

Armando Nunez

My pleasure.

Benjamin Swinburne - Morgan Stanley, Research Division

Just to give you the background, Armando has the relatively newly created position since October of last year of overseeing all of CBS's international and domestic distribution business. The CBS global distribution group includes the international studio business, which licenses CBS programming worldwide, so over 200 markets across multiple media platforms, and CBS Television Distribution, the preeminent domestics indicator and producer of first-run and off-network programming.

And one of the themes over the last 1.5 days has really been monetizing content on multiple devices in and out of the home, multiple markets, multiple business models. We had Netflix yesterday. So this stuff is super relevant, everything we've been talking about for the last couple of days.

Question-and-Answer Session

Benjamin Swinburne - Morgan Stanley, Research Division

Armando, maybe to start us out, can you talk a little bit about the business you manage, so people get a sense for what it is and how it fits into the sort of CBS business model?

Armando Nunez

So on the international side, we manage the distribution of the content outside the United States. We basically have kind of 4 business pods of how we monetize our content: The traditional distribution of our content to traditional broadcasters; the nontraditional new media piece, which, as time goes along obviously, those, the traditional and nontraditional, are coming closer together. We monetize that content by the production of local formats, the rights to shows that we have the rights to produce local versions of around the world; and then, our International Channels business. On the channel side, we have now, at this point, a presence in 87 markets around the world through, I believe it's 22 channels in 20-something languages around the world.

So that's the international piece. And the domestic piece is obviously the syndication piece, the distribution. We have 7 of the top 10 shows in domestic syndication, shows like Dr. Phil, Judge Judy, Wheel of Fortune, Jeopardy. We also, obviously, license our off-net content in the cable universe and then obviously, the digital piece as well. So that's pretty much the landscape of -- that I manage.

Benjamin Swinburne - Morgan Stanley, Research Division

Can you help us think about the relative size of the syndication licensing business at CBS within the total revenue of the company?

Armando Nunez

Well, internationally, we've gone on record as saying that we are about -- we had over $1.1 billion in revenues the last year. And we will exceed that this year as well. And I believe, on the domestic side, we said that our business is roughly around $2-ish billion, $2 billion something.

Benjamin Swinburne - Morgan Stanley, Research Division

Got it. Okay. One of the things that we talked about yesterday with some of the other media companies, News Corp and Discovery in particular, is how the industry is approaching monetizing content online, and that there are different philosophies out there with different approaches to what windows makes sense. How does CBS look at that opportunity, whether it's Netflix, Google, Amazon, given how much the sort of existing ecosystem means to the company? And how do you manage it across the company, because you're global and the windows are different everywhere?

Armando Nunez

Look, obviously, all of these new distribution outlets are just new pipes for us to place our content. So when you take a step back, these are all good things. Technology is our friend. These pipes are new clients to us. And our -- what we spend a lot of time looking at, both domestically and internationally, is how we're going to monetize this content. How are we going to do this in a smart, strategic way that is, at the end of the day, going to be good for our core business? And especially when it comes to CBS content, you take a step back and look at our content, we tend to have content that has a very long shelf life. So much of the monetization of our content is not just from that just one sale, that initial sale. It's the sale of that content on a windowed basis. It's in its first cycle in many places, and then it's that repeat sale over and over and over again. And then in success, after those cycles kind of go through, then this content goes into our library and we continue to sell it. I mean, Leslie has said on many occasions that example about I Love Lucy, that we still monetize. And we do that with so many shows, I mean, so many shows have become successful shows and go into our library. I mean, CSI, CSI is been still, today, the most watched television show in the world. And 30 years from now, somebody else will be sitting here in this chair talking about the monetization of CSI around the world. So I think the biggest thing when it comes to the licensing of our content in the traditional space and nontraditional space, it's about a strategic view of how we're going to monetize it, so that it's incremental and not just taking money from one pocket and putting it in the other.

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