Why Les Moonves Doesn't Care If You Don't Think CBS Is Sexy
There's not much CBS head honcho Leslie Moonves loses sleep over: not viewer fragmentation; not Aereo, or Dish Network's Hopper; not "The Walking Dead," "Duck Dynasty" or "House of Cards."
CBS is entering the upfronts -- the time when TV networks secure advertising dollars for the fall season -- in a strong position. Not only is it No. 1 in total viewers, a title the network has held 10 of the past 11 years; it's also No.1 among adults 25 to 54 and the most-watched among the advertiser-coveted 18-to-49 demographic for the first time since the 1991-92 season.
Even so, it's impressive that Mr. Moonves doesn't break a sweat when he insists CBS will parlay that reach into high-single to low-double-digit percent increases in cost-per-thousand rates from advertisers this year.
"The numbers speak for themselves," Mr. Moonves, 63, said coolly from his New York office on the 35th floor of Black Rock, the longtime home of CBS. A retro TV set is one of the few decorations in the office, an apt prop for a man who staunchly believes in the traditional broadcast model.
Mr. Moonves cuts an intimidating figure as an aggressive defender of the Eye Network, a skill he has honed since joining the company as president of entertainment in 1995, when CBS was dead last among the Big Four. His confidence doesn't waver, even as overall broadcast viewership continues to decline and advertising dollars begin to shift, albeit slowly, into digital content.
"If you need to reach a mass audience, you're not going to get that online," Mr. Moonves said. "We figured out you'd need to buy like 2 million spots on YouTube to equal one "NCIS.'"
He's relying on Jo Ann Ross, president of ad sales, to sell CBS's stability during its pitch May 15. Ms. Ross, too, is confident it will be another strong year for the network.
"When clients are looking at a media plan or to lay out budgets, they sit at Carnegie Hall year after year and see consistency across the board with our management and with our scheduling, so they are not betting on [numbers that haven't already been produced], they are betting on numbers they know, numbers that are proven," Ms. Ross said.
Not everyone is so certain. Pivotal Research analyst Brian Wieser is skeptical about Mr. Moonves' forecast. Unless unexpected volume shows up in the marketplace over the next few weeks, which he believes unlikely, Mr. Wieser predicts CBS will garner CPM increases of 7%. Mr. Moonves said CBS saw 9% CPM increases last year.
CBS is averaging 12 million viewers season-to-date, substantially ahead of its next closest competitor, ABC, which is averaging 7.8 million. Fox and NBC are neck-and-neck, with 7.1 million and 7 million viewers, respectively.
"They are the only broadcast network left in a traditional sense that's accessible to a wide audience and attracts broad ages," said one media buyer who asked not to be identified talking about any individual network so close to the upfronts. "So they are unique in that and really valuable."
Mr. Moonves, who is heavily involved in programming the channel, knows his audience. Starting out as an actor with a brief stint on "The Six Million Dollar Man" before moving behind the camera, Mr. Moonves has held executive roles at Lorimar and Warner Bros., where he became CEO of the studios' production unit, helping develop shows like "ER" and "Friends."
CBS's bread-and-butter is procedural dramas and comedies, and Mr. Moonves' success rate for these has been impressive. CBS has two of the longest-running programs on TV -- "NCIS" will be entering its 11th season, while "CSI" was reupped for its 14th season. And the network has already renewed 18 of its series for the fall.
"I wouldn't bet against Les Moonves," said Gary Carr, senior VP-exec director of national broadcast at TargetCast. "They are not trying to impress the coasts. They are proud to be strong with Middle America. These are formulaic shows that live long lives and build an audience. They don't take too many risks. Whenever they've tried to go real young or out of their comfort zone it hasn't worked."
While this consistency has allowed CBS to garner among the highest CPM increases, it's also left the Eye Network with the lingering stigma of being an old, or as Mr. Moonves puts it, "square" network.
"Even if they have some of the highest-rated programs among 18-to-49, it's hard to get them included on younger buys," according to another media-buying veteran who asked not to be identified. "They have a perception problem."
Mr. Moonves has never given credence to the belief that the 18-to-49 demo is the be all and end all. "The average age of a "60 Minutes' [viewer] is 61 years old and we sell that very well; we make a lot of money on that show," he said.
"The aging U.S. population is working in [CBS's] favor," said Marc Morse, senior VP-national buying, RJ Palmer. "The new 18-to-49 is 25-to-54. I'd rather be in that demo -- they are spending more and there are more of them."
"You can argue 25-to-54 is almost as important of a demo as 18-to-49," Mr. Carr said. "There's almost as much business written."
While media buyers agree that CBS is a must-buy for brands looking to reach an older demo, there's skepticism about just how efficient it is for younger consumers who tend to be light TV viewers. And then there's the net's reputation among some buyers for intractability when it comes to product integrations. They say that CBS offers them less leeway than rivals.
"To be successful with interesting integrations, it needs to work for both parties; I'm not sure [CBS] buys into that theory," said the second buyer, noting: "I encourage my clients to give CBS only what they have to."
To this, Mr. Moonves responds: "Integrations are only successful if people are watching."
"In spite of ratings being really good, when you look at specific stats like purchasing power and attentiveness, there are other shows on other broadcast networks that do better," said the first buyer. "CBS doesn't have specific shows clients need to be in." According to Trendrr, CBS ranks fifth in social activity in prime time, excluding sports and special events, behind the other three major broadcasters and the CW (a joint venture between CBS and Time Warner). CBS's most-social show, "The Big Bang Theory," is No. 9 among broadcast shows this season based on social conversation, according to Networked Insights. "How I Met Your Mother" and "Criminal Minds" are Nos. 16 and 17, respectively, while "NCIS" comes in at No. 23 and "NCSI: Los Angeles," is No. 82. (Trendrr's top three are Fox's "The X Factor," "Glee," and NBC's "The Voice.")
This isn't to say CBS isn't participating in the social conversation. The network hosts weekly live chats for shows like "Criminal Minds" and "The Amazing Race," as well as Tweet Week, a weeklong event during which CBS talent, showrunners and producers tweet live.
And social chatter isn't necessarily an accurate measurement of viewer engagement, said David Poltrack, chief research officer at CBS, noting just 10% of the population represents 75% of total tweets, most of which are young women between the ages of 15 to 24. "This is not our target audience. It doesn't mean our viewers are not engaged, they are just communicating differently."
In other metrics, such as IAG's measurement of attentiveness and Keller Fay's word-of-mouth survey, CBS ranks No. 1.
"By all measures, with the exception of what people are tweeting, we are top of conversations," Mr. Poltrack said.
Still, RJ Palmer's Mr. Morse says the preponderance of social engagement is on other networks. "The older demo is doing less [tweeting], but the demo will be more socially savvy as the population gets older," he said.
There's also no correlation between social-media buzz and ratings, and second-screen activity still plays a small role in media buys. "It's great to have a lot of buzz, but you need to have eyeballs. Prime-time TV's job is to deliver a big audience quickly," said Brett Whelan, VP-director-national broadcast at Initiative, who has worked with client Dr Pepper Snapple Group on integrations for the beverage marketer in "The Amazing Race" and "Survivor."
""NCIS' may not have social buzz, but it's the most-watched," Mr. Moonves said. "Call us least-sexy, that's fine. Give me what's measurable."
He's also dismissive of shows such as AMC's "The Walking Dead," A&E's "Duck Dynasty" and History's miniseries "The Bible," which are part of the cultural zeitgeist and bring in comparable ratings to many broadcast series, presenting other opportunities for reach outside the Big Four.
"The cable numbers are really good, but they don't equal an "NCIS,' they don't equal a "Big Bang Theory,'" Mr. Moonves said. "Look at what Turner's No. 1 show is on the whole Turner networks: "Big Bang Theory' repeats. Two of USA's highest-rated shows are "NCIS' and "NCIS: LA.'"(This holds true, outside of sports content.)
"You can't just buy "Duck Dynasty,' you have to buy around a schedule; you get all the other programming," Ms. Ross said. "You can't just buy "Walking Dead.' When you buy CBS, you buy seven nights of the week, and on every single night there is a program or more than one program that's going to hit their target audience."
Still, CBS is experimenting with different types of programming. This summer it will air "Under the Dome," a miniseries based on the Stephen King novel of the same name. The episodes will stream on Amazon Prime four days after they air, a new type of deal for CBS, which has been reserved in the programming it shares with streaming-video services.
In addition, the network will also have more reality programming during the summer months. While CBS was one of the first to invest in the genre, reality has never been a significant part of its schedule. CBS has also remained on the sidelines of talent competitions like "The X Factor," "The Voice" and "America's Got Talent."
"We wish we would have had "The Voice' -- it's a great show," Mr. Moonves conceded. But he then followed up with criticism that other networks rely too much on one reality series airing across several nights.
CBS's lack of a major ad-supported cable network puts it at a disadvantage, at least when it comes to offering advertisers edgier, darker shows. The company is getting back into the cable space with a 50% stake in TVGN, a network once known predominantly as a TV-listing service. Mr. Moonves and his joint partner, Lionsgate, will position the channel as a general-entertainment network with red-carpet coverage and Hollywood gossip programming, along with CBS's library content.
NBCUniversal's performance during the upfronts will provide a clearer picture of whether a portfolio of cable channels gives a network a competitive advantage. The media conglomerate, which owns NBC along with 18 cable networks, combined its broadcast, cable and digital ad sales team under one umbrella led by Linda Yaccarino late last year with the intention of seamlessly packaging assets.
"Will they throw NBC under the bus to get deals done?" Mr. Wieser of Pivotal Research asked. "Typically, bundles mean paying less, get a discount, and it's not clear that bundling makes sense yet. NBCU's success with this will indicate if CBS is leaving money on the table."
Regardless, Mr. Moonves has plenty of other revenue opportunities for CBS's TV business. He's been striking deals with streaming services like Netflix and Amazon Prime for its TV-library content, which includes classics out of Paramount Pictures like "I Love Lucy" and "Star Trek."
Mr. Moonves has also predicted that by early 2017, CBS will bring in $1 billion in retransmission fees. "If ESPN is getting $5.25 a sub, we should be getting $20 based on viewership," he said.
This bravado comes despite a bitter court battle with Aereo, which avoids retransmission fees and streams broadcast stations to paid subscribers. Mr. Moonves is confident that CBS and its broadcast brethren will prevail. But if not, he has a plan: to pull CBS. If Aereo is allowed to operate as is, Mr. Moonves said he will turn CBS into a cable network, which would prevent the company from poaching its signal.
He's taking a similar hard line with Dish Network's Hopper, which allows users to record broadcast TV shows and automatically skip over commercials, threatening to upend the TV model.
"I told [Dish CEO] Charlie Ergen if he wants to give us $5 a sub, I won't argue," Mr. Moonves said. "If he wants to give me money to offset the loss I will have from the subs not watching commercials, I am more than open to that. ... If they want to eliminate my commercials, I have to eliminate my service." CBS's deal with Dish Network expires in 18 months.
Mr. Moonves has good reason to defend advertising, which accounts for about 60% of CBS's revenue, yet he's taken steps to reduce the network's reliance on ads. "It could happen one day that we get paid more for subscriber fees then we do in advertising," he said. "But it will still be many years from now."
But one thing's for sure: The highest-paid media CEO in 2012 with a compensation package valued at over $62 million runs CBS with unfaltering conviction.
"Are there issues facing the broadcasting industry every day? Of course. Do we have a lot of online potential changes going on? Absolutely. But we have a very active company with very smart people who talk about these issues all the time. So as changes come, we are ready for them."