CBS unveiled a five-year business plan Tuesday aiming to increase revenue by $3.75 billion by 2020, leaning mostly on big streams like retransmission fees, but also ratcheting up its business online and overseas.
To reach the goal, CBS predicted it would have 8 million subscribers to its so-called “over-the-top” services — CBS All Access and Showtime streaming — split equally between the two.
It is aiming to rack up another 4 million members paying for its content as part of “skinny bundle” packages, newly-launched options that slim down a pay-TV bill to 10 to 20 channels rather than pricey hunks of hundreds of networks.
CBS laid out the plan at the its Investor Day in New York on Tuesday, which is the first event of its kind in five years, it also served as the first chance for CEO Les Moonves to lay out his long-term strategy for the company since becoming its chairman. Last month, 92-year-old media mogul Sumner Redstone stepped down, putting Moonves firmly in charge of CBS, which owns its namesake broadcast network as well as premium cable channel Showtime and radio holdings.
CBS identified four pillars to reach its goal for $3.75 billion in annual additional revenue: retransmission fees and reverse compensation, its own over-the-top services, international deals for its content and compensation from skinny bundles as well as advertising on delayed viewing.
Retrans and reverse comp will be the largest contributor, with CBS predicting it would add another $1.7 billion yearly by 2020.
But in newer businesses, it’s aiming to add $800 million from its over-the-top services, $800 million by licensing its content in international markets, and $450 million from skinny bundles and getting paid for delayed viewing, through things like inserting targeted ads.
Moonves also took advantage of the investor event to try to separate CBS from market worries that have plagued television companies since this summer. In August, a Disney disclosure that its powerhouse ESPN lost subscribers spurred a mass exodus from television stocks because of worries that online viewing and “skinny bundle” Web TV options were cannibalizing the companies’ traditional business.
With its five-year plan, the company put dollars-and-cents predictions to those trends, spinning them as additive rather than destructive.
Joseph Ianniello, the company’s chief operating officer, said that to reach 4 million members to its Showtime over-the-top service, the company is targeting the 90 million households that either have broadband service or have have a pay-TV package that lacks Showtime network.
He predicted All Access’ original content — starting with a “Star Trek” series in January and followed by about 3 or 4 tentpole releases every year — would drive membership, in addition to demand for catch-up viewing.
In a question-and-answer session after the presentation, Moonves said that online-streaming rival Netflix “came and wanted to spend a lot of money” to secure the rights to the “Star Trek” series. He said the company opted to launch the program on All Access as its stake in the ground that CBS believes in the platform.
Moonves added that CBS is considering an offer that combines Showtime and CBS All Access memberships at a discounted price.
He punted when asked about a recent report that CBS is considering a bid for premium cable network Starz, saying the company is always “looking at everything.”
Earlier in the program, the company dumped a trove of data about who’s subscribing to All Access, without providing the number people most want to know: current member numbers.
The average age of a CBS All Access customer is 42, with 68 percent in the advertiser-friendly demographic of age 18 to 49. It splits 58 percent female to 42 percent male, and 20 percent of subscribers watch All Access every day.
Meanwhile, each subscriber to the Showtime over-the-top service nets the company $8.25 each month, and each member to CBS All Access imparts $5 from subscription fees and another $3.50 from in ad revenue.
Skinny-bundle compensation is stronger than with a traditional pay-TV providers but not quite as strong as the direct services, Ianello said, estimating it conservatively at $4 per subscriber monthly.
Shares in CBS closed Tuesday down 1.3 percent at $52.59, and weren’t active after hours. The stock has dropped about 15 percent in the last year.