Moonves: We're Willing to Talk to Aereo - Broadcasting & Cable

Moonves: We're Willing to Talk to Aereo

But says he thinks business model relies on illegal, free content
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CBS President Leslie Moonves says he is “open and willing” to talk to Aereo about its latest effort to get a copyright license to carry TV content, but says: "I don't think their business model makes sense unless they were getting content illegally and for free.”

The Supreme Court ruled that Aereo was providing a public performance, not simply remote access to antennas and DVRs, and was illegally distributing TV station content without paying a copyright license. Aereo is now applying for that license, arguing that it is like a cable system — the court said it was very similar — and entitled to a blanket copyright license, after initially arguing it was not.

Moonves was being interviewed at the Fortune Brainstorm Tech Summit in Aspen Tuesday.

He said Aereo had made a "very good" case to the Supreme Court, but that Aereo's legal strategy was to make it appear that CBS was trying to stop innovation and technology or preventing its content from going online or into the cloud. "Nothing could be further from the truth," he said.

Moonves said he thought CBS had been one of the most progressive companies in looking where its business was going. Moonves said CBS was not against working with Aereo and that there were "certain things that Aereo had that may be able to be used in the future."

Moonves said he would have been willing to negotiate payment from Aereo at the outset, but the company never asked.

Moonves was asked why CBS didn't just do something similar on its own. Moonves said that CBS would have done so if Aereo had won. But he also pointed out that CBS is no longer primarily a broadcast service. "The reason this didn't make sense is that, right now, almost 90% of the people watching CBS are watching from satellite, cable or telco, so in essence we are not so much an over-the-air broadcast. You can still get it, but a very low percentage of our viewers get their content that way."

But, he reiterated. "If Aereo wants to do it legally and approach us about having this content, we are more than willing to talk to them."

A few other highlights of Moonves’ discussion:

On all the new ways of making money on content:

Moonves said the amount of revenue they take in from on-air broadcasting advertising has dropped in recent years from 70% to 50%. “There are now so many different ways to sell our content,” he said, specifically mentioning SVOD services like Netflix, Amazon and Hulu Plus.

He also added that the expansion of international business has been a boon to content providers with content being bought in new territories — CBS is expanding to Latin America, the Middle East and the Far East.

“The upfront part used to be far more important than the backend,” he said. “That is shifting.”

Summer programming

CBS has made a major push the past two summers with airing scripted programming during the June-August months, a period that broadcast nets had seemed to concede to cable for years.

“The cable networks were cleaning our clocks in the summer,” Moonves admitted. “The networks basically put out a sign that said on June 1, ‘we’re closed until Labor Day.’”

Moonves said that the SVOD deal with Amazon for Under the Dome and Extant — which put episodes on the service four days after its airing on TV — have made it possible to invest in high-quality scripted fare for the summer months, when TV viewing drops. He added that international syndication deals help as well.

“It’s almost like the rating on CBS is secondary,” he said. “The shows are successful before they even get to the air.”

On Bidding for Univision or NBA media rights:

Last month the Wall Street Journal reported that Univision Communications had discussed selling itself to media companies, naming CBS as a potential buyer. Moonves said that was not likely.

“We’re not interested in buying anything right now,” he said. “We’re very happy with the hand we’re playing right now.”

With regards to NBA media rights, which expire following the 2015-16 season, Mooves said that CBS is likely to sit this one out. The league is in an exclusive negitationing period with its current rights holders ESPN/ABC and Turner; the Wall Street Journal reported Tuesday that the league is looking to double its current take.

“We have four major franchises at the network that we have licenses for the next decade,” said Moonves, who mentioned that CBS has just started a new rights deal with the NFL that will see it pay out over a billion dollars per year.

“I’m almost positive you will not see us bidding for Major League Baseball or the NBA as they come up.” MLB just started a new eight-year rights deal this season.

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