No More Quiet Period for CBS

Les Moonves eyes 10 percent CPM hikes in upfront

Les Moonves on Wednesday broke his uncharacteristic silence, telling CBS Corp. investors that his sales team would look to secure the highest CPM increases in the upfront marketplace.

Speaking at the company’s first-quarter earnings presentation, the president and CEO predicted that this year’s upfront would share some DNA with the 2012-13 bazaar. “Pricing increases will look very similar to last year,” Moonves said, adding that CBS would look to secure rate hikes in the “high single- to low double-digit” range.

“And there you have it, the numbers you have been waiting for,” Moonves cracked, a nod to how anxious analysts have been to hear him thump his chest in time-honored fashion.

CBS last year led the upfront marketplace, landing 9 percent CPM increases on the way to booking some $2.65 billion in advance commitments. Moonves earlier that spring had agitated for hikes of 10 percent or greater.

While Moonves’ bluster was a return to form—in February, he joked that his sales department would murder him if he were to make another outsized prediction—it flies in the face of what media buyers have been saying in recent weeks. Suggesting that demand for broadcast inventory has reached its apogee, many senior TV buyers are saying that they are unlikely to write CPM premiums in excess of 6 percent.

Wall Street watchers are following the agencies’ lead. Barclays media analyst Anthony DiClemente said he sees similar pricing patterns, noting that CPMs in aggregate are likely to increase by 6 percent. DiClemente added that he believes that ratings king CBS will continue to outperform, booking 6.5 percent rate increases, while boosting dollar volume 10.5 percent to $2.93 billion.

Certainly, CBS has a lot going for it as it heads into the spring sell-off. It not only beats all comers in reach, averaging 12 million viewers per night, but it also has the crucial 18-49 and 25-54 demos all wrapped up.

Moonves’ remarks arrived a day after he took a few jabs at Barry Diller’s Aereo, which has been the subject of multiple lawsuits as broadcasters look to prevent it from retransmitting their signals without permission.

Speaking at the 2013 Milken Institute Global Conference, Moonves said Aereo’s business model amounted to little more than unarmed robbery. “It’s illegal—they’re taking our signal, they’re charging people for it, they’re not giving us any money,” Moonves said, adding that CBS will file another suit if the startup makes good on its threats to hang up a shingle in Boston.

Although Moonves dismissed the validity of the Aereo proposition—“They’ve been in business for a year and a half and they have all of 2,000 subs…It’s nothing we lose sleep over”—he also intimated that he’d sooner dump the broadcast model altogether than allow Diller to hijack his signal.

“We’ve already spoken to the cable networks in New York and the New York area. We can do it in a few days and put it right there,” Moonves said. “If we go to cable, which we’ll do if we’re forced to, then there’s going to be 10 [percent] to 15 percent of America who won’t get our stations. And that’s not very good when they want to watch the NFL or they want to watch NCIS.”

When pressed to reveal if he actually believes that a jump to cable is in the cards, Moonves effectively reversed course. “I doubt it will come to that [because] I think we’re going to win legally,” he said. “If not, then once again, I don’t think they’re going to hurt us with 2,000 subs in New York City.”

Moonves went on to dismiss Aereo altogether, suggesting that the company was merely a phantom conjured up by Diller and an obsequious trade press. “Aereo is not a problem, [and] it’s gotten waaay blown out of proportion,” he said, noting that his antagonist has received media coverage that is wholly disproportionate to its actual merit. “You know, Barry Diller’s done what he likes to do, which is disrupt things, and he’s succeeded ‘cause everybody’s writing about it,” Moonves said. “There’s nothing that concerns us.”

The CBS capo also took a swing at the digital hordes aping broadcast’s legacy upfront model. “It’s sort of ironic. People having been saying the upfront…is such an antiquated system…and now the interactive guys are copying the network guys,” he said. “So maybe we’re not so old after all.”

Thanks in large part to the estimated $263 million in Super Bowl XLVII ad bookings, CBS saw Q1 ad sales revenue jump 8 percent versus the prior-year period. The company said scatter rates are now up in the double digits.

Net earnings came in at $463 million, up 22 percent from $394 million a year ago.

CBS presents its 2013-14 prime-time schedule on Wednesday, May 15, at New York’s Carnegie Hall.

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