Netflix, CBS and Fox Execs Detail Their Plans for Streaming and Advertising in 2017

Talking mergers, growth and ad revenue

This has has been a roller coaster year for the television industry—ratings are falling, the upfront cost per impression is soaring, and there are major questions about the future of TV—which means TV's top executives have a lot to reflect on as they plot for 2017.

And that's what many of them did at the UBS Global Media and Communications Conference, which kicked off today in New York. Here are some of the Day 1 highlights:

Netflix doubles down—again

Netflix is bigger than ever—chief content officer Ted Sarandos said the company currently has 30 scripted series in various stages of production. That's double last year's output, and Sarandos said the number will double again next year.

Just about the only genre he's not looking to program is live sports. "To the extent that the 'live-ness' is the selling point, we're really not a great solution," he said.

While Netflix keeps getting bigger, Sarandos said it isn't interested in being acquired by a larger company. "We've been maniacally focused on one product," in a way that big companies aren't able to do because of their size, said Sarandos.

Unlike many of Netflix's competitors, which are trying to own as much of their content as possible, "I don't want to get trapped in that model" of only producing shows that the company owns outright. Otherwise, Netflix would miss out on opportunities like its recent revival of Gilmore Girls, which is owned by Warner Bros.

Instead, the company is focusing on using most of its licensing dollars to grab global rights to shows outside of its home market, like Designated Survivor or Star Trek: Discovery.

As usual, Sarandos declined to talk about ratings, explaining that "every show is not designed for the same audience," and each have different budgets and different economics. "We try to make sure we have something for everyone in the house."

Sarandos also took a shot at his streaming competitors Hulu and Amazon, noting that while they are also pouring billions into original content (Netflix has a $6 billion original content budget for 2017), "it doesn't appear they're gaining traction against all that spending" and closing the gap with Netflix. "As of now, they're just spending a lot of money," he said.

Netflix expects to grow for years to come. "I really feel like we're in the early innings of this business, of internet television," said Sarandos.

CBS: 'Anything could happen' with Viacom

Leslie Moonves, chairman, president and CEO, CBS Corp., didn't shed any light on his company's merger talks with Viacom, which are ongoing but in the early stages. "We are very happy the way we are as a standalone company," but "anything could happen," said Moonves, who praised the early moves by Viacom's new acting president and CEO, Robert Bakish, as "pretty positive."

While CBS' programming was absent from last week's launch of DirecTV Now, Moonves said the companies are still negotiating, and that digital rights and stacking rights are part of the holdup. Still, "I'm assuming that we will be able to make a deal with them," said Moonves, though he questioned how AT&T will be able to make money on its current DirecTV Now pricing plans. "There's no way they can last for a whole long period of time at $35 for 80 channels."

CBS won't have the benefit of presidential political advertising or the Super Bowl in 2017, but Moonves said the network will have the entire Final Four (it alternates with Turner as part of their new deal). That means it "is going to be a very strong year once again. … I'm feeling really good heading into May." Scatter has been strong this fall, though not at the same level as last fall, given the robust upfront demand this year.

He insisted that despite the declines in NFL ratings this fall, "there have been no makegoods" on any NFL inventory and the games remain the top draw on TV. When CBS didn't have NFL rights between 1995 and 1998, "the network fell apart," said Moonves.

This was Moonves' first public appearance after completing a deal last week to finally bring NFL games to CBS All Access subscribers (except for mobile; Verizon maintains exclusive mobile streaming rights). "We have a very good partnership with them," he said, explaining how the deal got done. "We give them over a billion dollars a year. It's not hard to figure out!"

CBS research chief: ratings are down, but ad revenue should still rise

David Poltrack, chief research officer for CBS Corp. and president of CBS Vision, said network TV ad revenue was up 8 percent this year, with an underlying growth rate of 4 percent after the Summer Olympics were subtracted. He predicts a 4 percent underlying growth rate for 2017, with no overall change after adjusting for the lack of Olympics content in 2017.

Those increases will come even though C3 ratings fell for the top four broadcasters this fall: CBS is down 10 percent, NBC dropped 7 percent, ABC plummeted 21 percent and Fox fell 11 percent. Poltrack attributed the drops to the election (which included an uptick in cable news ratings, and top-rated shows that were pre-empted by debate coverage), a seven-game World Series and soft NFL ratings.

The new broadcast season is "still unsettled," said Poltrack, who said that twice as many ad-supported cable networks are showing season-to-date audience losses versus last year (32 networks are down) compared with those showing ratings gains (17 are up).

Still, Poltrack predicted the 2017-2018 broadcast season should be "off to a strong start."

Fox says no to a merger, and OTT

Fox isn't feeling any pressure to make a big move in response to AT&T's proposed merger with Time Warner, said James Murdoch, CEO, 21st Century Fox.

"We feel pretty good about our mix of assets … we don't feel the urge to go acquire some other large piece," said Murdoch, adding "we've passed on a lot of opportunities that we thought were too expensive."

And while many companies are putting together their own over-the-top options for consumers, Fox isn't one of them. While "I think we could do it," Murdoch would prefer to focus on Hulu (which his company partly owns) and third-party options like DirecTV Now.

Murdoch pointed to Fox's success in its Empire and Pepsi integration last season, and Hulu's ad-free tier, saying, "That fluidity in the marketplace is something that we're really just at the beginning of." One future option, he suggested, would be giving consumers the ability to pay for a single night of ad-free programming, as opposed to an entire month, as Hulu now offers.

What grade would he give his father Rupert for stepping in to run Fox News after Roger Ailes resigned in July? "A-plus," said Murdoch.

Discovery: Global content is more important that domestic ratings bumps

Fox might be reticent to dive into over-the-top, direct-to-consumer offerings, but not Discovery. "We're well-positioned to take our product direct to consumer in 2017," said David Zaslav, CEO of Discovery Communications. "We're going to try to disrupt ourselves."

That process began a few weeks ago, when the company quietly launched a pair of direct-to-consumer offerings with Amazon, one with paranormal-themed programming (Destination Unknown) and one with crime-themed content (True Crime Files by Investigation Discovery).

Zaslav said the company is thinking globally. "For us, the fact that we're on brand really helps us. About 90 percent of our content works around the world," said Zaslav, who added that he and Discovery president Rich Ross have said no to shows that would have been ratings hits in the U.S. because they didn't resonate with international markets.

Along those lines, the company is working to "tighten up" the content on each network, rather than try to be all things to all people. "We're these branded groups, and let's not try to be anything else," said Zaslav.