CBS chief executive Leslie Moonves has put advertisers and local affiliates on notice: both will soon be paying more. Advertisers will face higher prices for commercials running on the network. And CBS TV affiliates will pay more in the form of substantial portions of the retransmission consent fees they receive from cable operators -- or risk losing their network affiliations.
Moonves made his remarks yesterday at the Credit Suisse investors' conference in Florida.
The CBS chief turned up the volume on pre-upfront posturing, insisting that the scatter market was commanding greater than 30 percent increases over last year's upfront marketplace. And it's not just CBS, Moonves said, asserting that Fox and NBC are also commanding such increases.
"I've never seen the scatter market as strong as it is right now," he told the conference attendees.
In fact, he said, the market is so strong that CBS is handing off additional time to its sales department normally reserved to promote the network's own programming.
Moonves insisted that the network would command "strong double-digit" price increases in the upfront, which will begin in May after the new fall schedules are unveiled. By comparison, advertisers paid reduced rates in 2009 when the recession was in full swing.
And if advertisers refuse to pay the increases, the network, like last year, will sell only 65 percent of its time upfront vs. the normal 75-80 percent, Moonves said.
His advice to advertisers during this year's upfront negotiations: "buy early and often."
As for local CBS affiliates, when asked if he would yank affiliations of stations that balk at paying the network substantial portions of their cable retransmission fees, Moonves replied bluntly: "Yes."
Affiliates, he said, "are sharing in the success" of high ratings and advertisers' demand for programming that the network spends roughly $6 billion annually to develop. "I need something back for that," he said.
Increasingly, local broadcast stations are demanding and receiving so-called retransmission fees from cable operators in return for permission to carry the broadcast signals on cable systems. In fact, Moonves said CBS' owned TV stations would collect about $250 million annually in such fees by 2012.
Moonves referenced the case of a Florida affiliate a few years back that refused to pay the network anything for its affiliation, and in fact insisted that the network pony up. CBS pulled its affiliation and the station dropped from first to fifth in the local ratings.
"We will find some other way into markets," where affiliates refuse to pay, Moonves said.
See also: "CBS Sells Out Online March Madness Inventory"