Bold Play by CBS Fortifies Broadcasters

Leslie Moonves, the longtime chief executive of CBS, has led a shake-up in the broadcast world that could be labeled revolutionary: the issue of compensation for retransmission rights. Before almost anyone else in the business, Moonves effectively pushed for distributors to pay fees to the broadcast channels just as they do to cable networks. The result has been a windfall for all the broadcasters and a crucial lifeline as audiences continue to shrink.

The most recent fight — a high-noon showdown between CBS and Time Warner Cable — ended this week the way all recent confrontations between big broadcasters and cable operators have ended, with the cable operator pulling out a checkbook instead of a gun. In the final deal, the cable provider will pay CBS a hefty increase in fees for the right to retransmit the signals of its stations in big cities like New York, Los Angeles and Dallas — a reported rise to $2 per subscriber over the next five years, more than double the network’s previous deal with Time Warner Cable. At the same time, CBS rejected demands that it give up the opportunity to sell separately its content to digital outlets like Amazon and Netflix, insuring another bountiful revenue stream, likely to be worth hundreds of millions a year. CBS projects that by 2017 it will take in $1 billion annually in retransmission payments. David Bank, an analyst with RBC Capital markets, said that the figure could easily go to $2 billion.