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CBS Corporation (CBS)

Deutsche Bank's DbAccess 21st Annual Media and Telecom Conference

March 04, 2013 6:00 pm ET

Executives

Leslie Moonves - Chief Executive Officer, President and Director

Analysts

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Presentation

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

All right. So we're going to get started. Thanks, everybody, for coming to our keynote dinner, first night of our conference. Very pleased to have with us tonight Les Moonves, President and CEO of CBS. So losing track of how many times we've sat down and done Les, but we always love to have you here, always love to hear from you. Thank you very much for coming.

Leslie Moonves

Always great to be here. Looking forward to talking. Let's begin.

Question-and-Answer Session

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

So we're going to get started. So let me go to some big picture, Les, just how does management think about driving value at CBS?

Leslie Moonves

Well, obviously, this company have gone through a major transformation, I think, in the last couple of years. And after we announced the REIT and looking down the road, our company is going to be only about 55% advertising. Now just a few short years ago that was north of 70%, the percentage of our revenue that was coming from advertising. So when you look at what has occurred over the last couple of years, obviously a number of new factors have entered into who we are. Retrans has become big, and is only going to get bigger. As all the conversations go on about who is buying what channel and how much they're going to pay for it and whether bundling is a good thing or a bad thing, we are the #1 network. We are the #1 network among 5 broadcast networks. We're the #1 network among 500 cable channels. So if people are going to be paying for eyeballs no matter how it turns out, we're going to get paid. So that means retrans will continue to grow immensely, as will reverse compensation. SVOD has been a major driver for us as well. We think Netflix is great. We think Amazon is great. We think all the new entries are going to be great. We have a huge library. We've sold primary library product. That is going to continue to grow, and as we talk about adding previous seasons of current shows, that's a number -- that will continue to grow. International revenue is growing in leaps and bounds for our programming. So the drivers are -- obviously, are content, which is being sold in many more different ways than possible -- than was previously possible. And when we look towards the future, we only see that growing. I don't see a downside or a risk factor in any of our businesses. I know my lawyers would not like me saying that. But we are very confident we're going to continue to grow. This, people have been doubting, the viability of the television network. The television network isn't what it used to be.

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

So I think we'll talk about each one of those points. Let me start with the network. I always have tons of questions about the network. One thing that comes to mind, I feel like you've put a little bit of extra elbow grease in the network this year, kicking the cord out of the Super Bowl to make it go dark for a while, so you could put some extra advertisements in.

Leslie Moonves

Well, the game at that point have gotten a little out of hand. And we said viewers may be leaving us. So what can we do? And what happened, we got some extra spots in during the 34-minute blackout. The game got closer, ratings went back up and it was a widely successful plan.

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

I haven't seen the tweet yet with you actually pulling the cord out, but I bet there's a picture somewhere. So just how is the network doing?

Leslie Moonves

Well, we are #1 in every single demographic. Yes, I know we were helped by the Super Bowl. That was a good thing. We were also helped by the Grammys. February sweeps, the first time we've won this February sweeps since 1998 in every demographic. Yes, we talk about the big events, helped us. But we also have the top 10 scripted programs on television. So the network remains very strong. Clearly, the season still has a few months to run. But I think we are going to win across the board. And that's a good place to be as we head into the upfront.

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

I think my favorite quote from last earnings season, November 7, Les Moonves, "People have to stop looking at overnight ratings because it's really a very, very different ballgame than it ever was." So I think, of course, I'm going to continue to look at overnight ratings. It just is what it is. But maybe go down by the different ways that viewers are accessing CBS content. Can you talk about that and how much of viewing is being done in other platforms?

Leslie Moonves

Yes. Look, I still look at overnight ratings every day of my life at 5:30 in the morning, 365 days a year. And it does give you an indication of what's doing well and what's not. But we hit a tipping point this year, which is why in the fall, numbers were tough to read. By that, I mean some of our hit programs, literally, only watched 60% now live. So the other 40% obviously is coming from DVR usage and to a certain extent, online. What happens now, if you watch in the first 3 days in the DVR, we get paid in full. If it got -- gets watched later than that, that doesn't happen, and online is significantly less than that. So what's happening is you can't tell what's doing really well for a few weeks, the real numbers. But when the real numbers come out, we have over 10 shows that add 3 million to 4 million viewers that have watched after-live viewing of it. As a result, the advertising numbers, you don't have a full picture until much later on. And the press has a tendency still to write down the overnight numbers, which once again while we are winning, we don't mind. But as it goes on, more and more revenues come in from different places. So you talk about multi-platforming. All we want is a fair measurement. We want Nielsen to measure everybody. And ultimately, we want an eyeball to count as an eyeball no matter where you watch your television show.

Read the rest of this transcript for free on seekingalpha.com