CBS Bullish About Streaming ‘Star Trek’

Earnings Call Notes: No numbers but All-Access poised to contribute to operating income
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Though they still won’t disclose how many subscribers it has, CBS execs did a lot of talking on the company’s earnings call Tuesday about its All-Access over-the-top streaming product.

The company, trying to shake a perception of being the most traditional of the media companies, said it expects All-Access and Showtime’s sibling streaming product to make significant contribution to operating income next year.

“As we grow in the short-term, we're setting ourselves up to live long and prosper in the long term,” CEO Les Moonves said, adding that both services posted strong subscriber growth in September with the launch of new fall shows.

The company will be boldly streaming original content with a new Star Trek series whose episodes will appear exclusively on All-Access. Also in 2017, Showtime will be streaming the new version of Twin Peaks.

“Our Star Trek initiative speaks to the fact that All-Access is a major priority for us and we will look for additional opportunities to expand our programming on this platform going forward,” Moonves said.

Original programming will distinguish the service. “There's about 1 billion channels out there, because of Star Trek people will know what All-Access is all about,” Moonves said. M

oonves explained why CBS is putting Star Trek on All-Access. “It is the family jewels. We have known from our information that all the Star Trek series have done exceedingly well in streaming,” he said. “It doesn't come as a great surprise, but it's the hippest, it's the coolest, even the ones that were done 30 years, 40 years ago still resonate today, and all the series have done extremely well in terms of streaming.”

Star Trek is also a huge international franchise. “Our international distribution guy is going crazy,” Moonves said. “He can't wait to get out to the marketplace and sell that. So right away we're going to be more than halfway home on the cost of the show just from international alone. So the risk is rather small and seeing the track record, we think it's going to be great and it's going to bring in a lot more subscribers, and so we're really excited about it.”

In response to a question, Moonves said CBS was thinking about an ad-free version of All-Access, like the on Hulu recently introduced. “As we progress into it, we're charging $5.99 right now for with ads and we've had discussions about, how about if we do a $9.99 with no ads? And it's a very possible thing for the future,” he said. “And yes, we are talking about what future projects, what original development we might put on All-Access, but it's still very early. Our main focus right now is Star Trek and we wanted to start with a bang, so to speak, and I think we have.”

Moonves said CBS might also offer CBS and Showtime streaming together. At the same time CBS expects to continue to do business with Netflix and Hulu.

In addition to streaming traditional shows, CBS is looking at creating content for smartphones, where an increasing amount of video is being consumed.

“Obviously with news and sports it's fairly easy to put together packages of smaller, shorter-length content. We can do excerpts from our football game and the headline news, which we are currently doing online as we speak,” Moonves said. “In addition, our late night guys lend themselves to smaller content putting on the Colbert monologue and the Corden karaoke, Carpool Karaoke, which is very successful.”

As far as entertainment content, CBS is looking at what it can do that would work on smartphones. “Obviously, Disney made a big investment in Maker Studio,” Moonves said. “We are doing that on a smaller scale internally, where we're exploring shorter forms of content where an entire series will be done in 60 minutes. In other words, 12 five-minute episodes and that right now is sort of in the early planning stages, and we've got to see how effective that is. But it certainly is something we are looking at for the future, and it is becoming an important worldwide piece of content.”

On the more traditional side of the business. CBS said its advertising business was strong. In the third -uarter network ad revenues were up 1%, but after taking out the effects of not having the U.S. Open and airing two fewer NFL game, underlying ad revenue was up 8%, the company said.

“The scatter market is remarkably strong. It's the strongest we've seen in many, many years to the point where our sales guys are beating down the door to remove promo and put sales spots in there,” Moonves said. “As we said, football is going extremely well. Late night's going well."

Moonves said that Super Bowl sales are going extremely well. “Not only are we getting record pricing that we're looking for, but there are just a few units left to sell. You can imagine what these last few spots will go for.”

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