2. CBS: A REVIEW
CBS Entertainment is the segment this presentation focuses on.
Bringing in 53% of Annual Revenue for CBS Corporation,
CBS Entertainment includes:
CBS Television Studios
CBS Television Distribution
CBS Television Network
CBS Interactive
CBS Films
CBS Studios International
3. THE CBS ‘SECRET SAUCE’
Television Content is the bread and butter of CBS Entertainment.
All of their business decision are reflected back to their
CONTENT FOOD CHAIN.
Network New
Syndication
Advertising Platforms
In other words….
TELEVISION CONTENT
is the Core Capability of CBS Entertainment.
4. CBS: BUILDING A FOUNDATION
FOR THE FUTURE
Over the next five years, CBS will need to strengthen that
core and take it to a different level. There are three areas
that I recommend CBS focus on:
5. ONLINE CONTENT
Sumner M. Redstone, CBS Executive Chairman, put it simply,
“Content is king, and content will always be king.”
Good content brings advertisers, and advertising currently brings in
65% of revenue for CBS Entertainment.
CBS needs to focus this core capability and bring it online in a fresh and
unique way. I recommend the following:
Expand current content and offer unique selections online.
Example, NCIS is the #1 scripted drama and falls in the CBS family. To
bring more audience to their online site, they could develop additional
content that solely exists digitally. (i.e., They could produce an NCIS
special that only airs at CBS.com.) If successful, they could add other
hit shows.
The EDGE: This will bring CBS to the edge and be first movers with
this type of varying content.
6. ONLINE CONTENT CAPABILITY
People
• CBS has the personnel involved already and I foresee no more additions, although the time
commitment will be greater for everyone.
Process
• I recommend two potential avenues for process.
• If a separate episode is to be produced, the storyline must be able to exist independently
from the network episodes. This will allow the audience to view both, or just one.
• If an extension episode is to be produced, it is possible that a ‘directors cut’ of the original
footage could be utilized. (e.g., the network episode is 50 minutes and the online episode 75
minutes.)
Technology
• CBS must put funds in their online streaming technology. It is subpar to Hulu, Netflix, and their
direct network competitors and often requires the viewer to ‘refresh’ or even stop watching
mid-episode. This is a critical piece to this capability.
Governance
• CBS holds their content closely and by expanding to their own online platform, it will retain the
current governance structure. There will be contract terms for artist and production personnel
and governance terms addressed in those negotiations.
7. ADVERTISING MAXIMIZATION
TV Everywhere: A concept two-years in the making, this
authentication will allow consumers to watch content on any
device that supports video viewing with their one-time subscription
fee to DirecTV, Dish Network, Comcast, Cablevision, Cox, Verizon
FiOS, and AT&T U-verse.
Given this innovation, CBS will gain greater accessibility of their
audience through various devices. This opens the door to
maximize their advertising revenue.
Advertisers are already beginning purchasing cross-platform. This
trend will increase and TV Everywhere will expedite this potential
revenue stream.
8. ADVERTISING MAXIMIZATION
CAPABILITY
People
• Sales will need to be at the center of involvement. They will need to create the most effective scales to
maximize profits. As well, they will need to determine the correct mix of inventory to offer upfront or through
scatter sales.
• An analytics team will need to be established to give the sales team the information necessary to make their
decisions.
Process
• Analytics: When content is being viewed cross-platform, CBS must be able to analyze viewership on each
platform. Once these numbers are accessible, they will be able to provide Sales the information.
• Inventory: Sales will take the information from analytics and determine the balance between upfront and scatter
inventory.
• Price: Sales will use the viewership numbers on each platform to customize prices and maximize both
advertising effectiveness and CBS profits.
Technology
• The cable companies will provide the authentication technology necessary for TV Everywhere. Viewers will
provide the technology of their preferred platform viewing experience.
• CBS will need to create the analytics infrastructure necessary to capture and analyze the viewership data.
Governance
• Who will own the viewership numbers for TV Everywhere? CBS must establish that they own those numbers.
Agreements must be formed so that CBS has ownership over numbers on all platforms that their content is
viewed.
9. INDUSTRY STACK
OTT
Services
Advertising
Platforms
Hardware
Telecoms
Distribution
Development
& Production
10. STRATEGIC PARTNERSHIP
It is visible from the industry stack that CBS has a presence on
three of the five layers: Development & Production, Distribution,
and OTT Services. They are absent on the Hardware and
Platform layers.
CBS must form a strategic partnership with a company on the
platform layer. This layer will become a critical component of
their future viability in the digital media and entertainment space.
I recommend that they develop a partnership with UltraViolet.
11. STRATEGIC PARTNERSHIP
UltraViolet: A new platform, UltraViolet provides an avenue for
consumers to build their own digital content library, viewable on all their
devices, by purchasing individual TV shows and movies.
Unlike Hulu and Netflix, there is no subscription fee; they pay per
episode.
CBS places a high value on keeping their content controlled, this is why
they do not allow first and second run syndications to be viewed on
subscription.
By participating in UltraViolet, they retain that control, as each episode
would be purchased individually. They have already stated that non-ad
revenues will consist of global syndication, retransmission consent, and
content license fees from emerging platforms. I believe that UltraViolet is
exactly that platform they are referring to.
12. CONCLUSION
Currently, CBS Entertainment sees 65% of their revenue coming
in through advertising. What they see as the new trend, is that
revenue will be driven by growth in cable and retransmission
consent fees.
By building capabilities of online content and advertising
maximization, along with forming strategic partnerships with
companies like UltraViolet that allow them to maintain control of
their content, CBS Entertainment will not only advance in the
digital sector, they will be a leader.
14. SOURCES
• CBS. (2011, February 25). Form 10-K.
• CBS. (2010, February 18). Q4 Earnings Call Transcript.
• CBS. (2010, May 5). Q1 Earnings Call Transcript.
• CBS. (2010, August 3). Q2 Earnings Call Transcript.
• CBS. (2010, November 4). Q3 Earnings Call Transcript.
• CBS. (2011, February 16). Q4 Earnings Call Transcript.
• CBS. (2011, May 3). Q1 Earnings Call Transcript.
• CBS. (2011, August 2). Q2 Earnings Call Transcript.
• CBS. (2010, May 5). Q1 Earnings Call Transcript.
• CBS. (2011, September 14). Bank of America Communcations and
• Entertainment Conference Transcript.
• CBS (2011, September 9). Goldman Sach Communacopia Conference Transcript.
• CBS (2011, June 2). Nomura MEdia Summit Transcript.
• Brian Stelter, "Campaign Trains Viewers for "TV Everywhere',"
• www.nytimes.com, September 11, 2011.
• UltraViolet company website, www.uvvu.com, accessed December 10, 2011.
• Images
• The CBS logo is the property of CBS Corporation
• The UltraViolet logo is the property of Digital Entertainment Content Ecosystem (DECE) LLC.