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CBS Financials Fuel Aereo Angst

Wonder why CBS Corp. CEO Les Moonves isn't wild about Aereo Inc.? It has to do with the amount of the money his company makes from retransmission fees. CBS posted a record first quarter Thursday, with revenues of US$4.04 billion. While an 8 percent increase in advertising made up the bulk of that revenue, retrans fees -- the money paid by pay-TV operators to retransmit CBS shows -- also contributed a sizeable chunk of change. Growth of 14 percent in affiliate and subscription fee revenue was reportedly "driven by 62% higher retransmission revenues and fees from CBS Television Network affiliated television stations as well as growth at Cable Networks." For the quarter, CBS brought in $519 million for retrans and affiliate fees combined. Unfortunately, CBS doesn't break out revenue from retrans fees specifically, but last summer Moonves noted that $250 million was a conservative estimate for quarterly retransmission revenue. Moonves has also said repeatedly that he expects the joint number for retrans and affiliate fees to hit $1 billion by 2017, if not before. Meanwhile, Moonves, like other broadcast executives, has threatened to turn CBS into a cable network if Aereo isn't shut down in court. (See Free TV Model Under Threat.) Aereo uses dime-sized antennas to capture free broadcast signals before transcoding and redistributing those signals over IP to subscribers. At a financial conference this week, Moonves stated that CBS could make the transition to a cable network "in a few days." — Mari Silbey, Special to Light Reading Cable
gconnery 5/3/2013 | 10:38:36 PM
re: CBS Financials Fuel Aereo Angst Yeah, seems to me that CBS is in the weakest position of the top four OTA providers with respect to their negotiating position for retrans if something like Aereo was declared legal (and they could figure out how to deploy it). ABC can threaten to pull ESPN and Walt Disney from a cable providers lineup if they don't pay up, while CBS can only really threaten to pull the CW, which wouldn't get nearly as many customers upset.
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