A dramatic illustration of the growing importance of international sales for the U.S. television industry occurred recently when CBS took the unusual step of having its top international sales executive, Armando Nuñez, speak at the company’s annual investors conference.
“You could say that the subtitle of this year’s conference was ‘Things you don’t know about CBS,’ and part of that was to highlight the enormity of the international business and the integral role that Armando plays in the success of this company,” says Leslie Moonves, president and CEO of CBS Corp.
The question of how integral to CBS’ growth gets answered by the revenue number from Nuñez’s division; it skyrocketed from $497 million in 2007 to $888 million in 2010, during one of the worst global downturns in the history of television. The figure is expected to hit $940 million in 2011. “In five years, Armando has nearly doubled the revenue,” Moonves notes.
That success is fundamentally altering the TV production business, allowing CBS to invest more heavily in programming, which leads to programming bigger shows that are more likely to attract higher ratings.
Moonves notes that “most” of CBS’ new primetime shows are now profitable in their first year, with all of the network’s current rookie dramas in the black.
Nuñez’s sales team is pulling in $2.5 million an episode for Hawaii Five-0, or $60 million in international revenue, making the show solidly profi table in its first season. “It’s a significant change from the old days, when producers ran deficits of $1 million an episode,” Nuñez says.
Even bigger returns can be achieved if a show blossoms into a franchise-level hit, like CSI. The various CSI shows produced more than $215 million in revenue internationally in 2010.
Beyond the strong international market for U.S. fare, CBS has also been very successful building a global sales team, with offices in 12 markets—a move Nuñez says has played a big role in the unit’s success. “International is one word, but you have to remember that the television market in each country is very different,” he adds.
That requires Nuñez and the CBS international sales teams to carefully plot out how they want to window their products through an ever-changing landscape of free TV, pay TV, free basic cable and digital outlets in each of the 220 markets where their products air.
In the U.K. alone, for example, the various seasons of NCIS have already gone through three cycles of sales and are currently available on five different outlets, with each sale timed to maximize the show’s overall revenue. “That is just one show in one market,” Nuñez notes.
Nuñez brings decades of experience and a distinguished pedigree to this effort. His father, Armando Nuñez Sr., worked for 20th Century Fox in Havana in the 1950s and moved to the U.S. after the Cuban revolution. “I was made in Cuba, but born in the U.S.,” Nuñez quips.
As his father became a widely respected international TV executive, Nuñez looked to follow in his footsteps. “Ever since I was a kid, I wanted to be in this business,” long before anyone knew what it was, explains Nuñez. “The New York Daily News used to have this section called the ‘Inquiring Photographer.’ One day when my mother and I were walking down the street, this guy stopped us and asked me what I wanted to be when I grew up. When I told him I wanted to be in the international TV sales business like my dad, he just looked at me like I had three heads.”
After Nuñez studied marketing and management at Fordham, his father helped him gain an entry-level job with Telepictures in 1982; from there, he worked his way up the ranks, landing international sales jobs at Viacom, New World and Universal in the 1990s.
Moonves brought Nuñez over to CBS to run international operations in 1999 and since then, Nuñez’s sales responsibilities have grown along with the division, which merged with King World in 2000 and Paramount in 2004.
Its international operations added Showtime’s product following the Viacom/CBS spin-off, and in 2007 acquired international rights to the CSI franchise. The division now oversees a library of more than 70,000 episodes as well as a hefty pipeline of new shows from CBS Studios, Showtime, CBS’ domestic syndication unit and CBS News.
With the growing importance of international sales, Nuñez works closely with production people around the company. And in advance of CBS’ May announcement of its 2011-2012 schedule, he speaks with CBS Studios’ president David Stapf almost daily about pilots and projects.
While Nuñez and his team provide input on a show’s international potential, he stressed that they are not greenlighting CBS’ new shows. “The most important thing they can do is to make a show that will be successful in the U.S., because that will increase the probability that the show will be successful internationally,” he says.
To further boost potential revenue for these new shows, Nuñez has also been expanding the company’s format business, producing $110 million worth of revenue in program and format sales for Top Model since its launch.
New international channels are another priority. Over the past 18 months, CBS has inked joint ventures in the U.K., Australia and India for the launch of 10 new channels, with more on the way.
“At the end of the day, we are a machine that monetizes content, and the channel venture is another way for us to do that,” Nuñez says. “It gives us license fees for the content and equity in the channel without a huge investment.”
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