FiOS TV, in Seven Markets, Will Pay CBS for Each Subscriber

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LAS VEGAS ( -- In a move with the potential to shake up the long-standing financial relationship between cable operators and TV networks, CBS Corp. has agreed to distribute content from its CBS owned-and-operated TV stations on Verizon Wireless' new fiber optic TV service.
Photo: AP
CBS Corp. President-CEO Leslie Moonves

Competing against cable
The service, called FiOS, will allow Verizon to transmit programming not over cellphones but through a TV service that, as one analyst said, threatens cable operators. The deal comes as Verizon, as with other regional phone companies, continues to fight regulatory restrictions in Washington and with local governments to offer a video service competitive to cable and satellite systems.

For CBS, the deal carries its own benefits: CBS will be paid for each subscriber, unlike the customary practice between broadcast nets and cable operators. CBS, like other broadcasters, does not receive payments per subscriber from the cable companies carrying its content. Instead, when it was part of Viacom, its onetme cable networks such as MTV received a premium payment from the cable operators as compensation.

Those old procedures no longer satisfy CBS, which split from Viacom, severing its direct connection to MTV. Its only remaining cable networks are Showtime and CSTV.

“With each subscriber that Verizon’s FiOS TV adds, CBS will directly benefit, and therefore, we look forward to our partnership as Verizon showcases our programming both in our [owned-and-operated] markets and across the country,” CBS Corp. President-CEO Leslie Moonves said in a joint statement.

Financial aspects of the deal were not disclosed, but its proceeds initially are expected to be small. CBS owned-and-operated stations cover about one-third of the nation, but FiOS TV is available only in seven states (California, Florida, Maryland, Massachusetts, New York, Texas and Virginia), and Verizon does not intend to charge subscribers extra for the CBS video-on-demand content, the joint statement said.

Types of programming
In all, the deal includes analog, digital, multicast and high-definition rights to programming on CBS owned-and-operated television stations; local VOD content from those stations; and CBS Television Network VOD content, including such current popular network series as "CSI," "NCIS" and "Survivor." The deal is expected over time to include other programs.

Named FiOS for Fiber Optic Service, it promises super-high-speed Internet service, plus the TV content from long-terms deals with A&E Television Networks, NBC Universal Cable, Walt Disney Co., Starz Entertainment Group and Discovery Networks. Verizon is also selling a movie-download service with Movielink's video-on-demand service.

Verizon Chairman-CEO Ivan Seidenberg said the deal “expands the market for both Verizon and CBS.” Verizon has made deals for content with most networks but the CBS agreement is so far the most innovative of the so-called retransmission consent agreements.

Jeff Kagan, independent telecom analyst, said Verizon is signing deals with one major TV station at a time, but “the quicker they can offer a complete package of service, the quicker they will bring a real threat to the cable television battle, and the quicker that competition will result in lower fees for customers and more innovation.”

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