Scott Koondel: Raiding the Library

Executive’s innovative deals boost CBS’ distribution revenue

CBS Corp. impressed Wall Street on Aug. 2, reporting secondquarter
earnings in which its content licensing and distribution
revenue grew 21% to $889 million.

That growth is largely due to groundbreaking
deals struck this year by Scott Koondel, CBS senior
VP of corporate licensing and distribution and CBS
Television Distribution’s president of distribution,
with a strong assist from his team. Even before he
earned his corporate stripes in March, Koondel was
constantly looking for ways to squeeze more dollars
from every piece of content that CBS produces.

“The goal is to get paid every single time someone
watches our content,” Koondel says. “Our obligation
to the consumer is to make our content
available to them, and our obligation to our shareholders
is to make sure we get paid well for it.”

In July, Koondel forged a deal for CBS with Amazon
that allows the upstart digital video distributor to
stream some 2,000 episodes of CBS library product to Amazon Prime subscribers.
In February, CBS cut a similar deal with Net! ix. Taken together,
the two deals are estimated to be worth $200 million annually to CBS.

Those digital deals represent a vibrant new revenue stream for content
producers, but they are additive to the lucrative distribution deals CBS
already has in place. In April, Koondel and his team sold rookie drama Hawaii
to TNT for an estimated $2.5 million per episode, in a deal that
also allows TNT to stream the show to customers via Time Warner’s TV
Everywhere initiative. In fall 2009, CBS sold another
rookie drama, NCIS: Los Angeles, to USA for a similar
price, and that rich deal didn’t include digital rights.

All of the new digital entrants—Netflix and Amazon
in particular—represent a new frontier for television
studios, and now they must figure out how to
best monetize these new opportunities without damaging
the studios’ long-term production businesses.

“I’m looking at all of the different divisions from
30,000 feet,” says Koondel, who is considering everything
from music rights to electronic sell-through
to digital video on demand. It’s a task that practically
requires a crystal ball.

Koondel also made a commitment to create new
business with networks not known for acquiring offnetwork
product. In July, CBS sold reality program
Undercover Boss to TLC and OWN to premiere next fall, even though
repeats of network reality shows typically do not sell well in syndication.

“CBS is really " ring on all cylinders,” Koondel says. “There’s never been
a better cohesive environment here than there is right now. We are all
constantly talking and making sure that we understand everything that’s
changing the business so we can adapt and prepare.”