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Moonves: Reverse Comp to Grow in 2011 And Beyond

CBS Corp. President/CEO Leslie Moonves said the network has big plans to grow its retransmission consent revenue in the coming years, with the CBS affiliates kicking in a bigger chunk of revenue they've negotiated with pay-TV carriers.

Speaking to a room full of investors at the Goldman Sachs Communacopia conference in New York Wednesday, Moonves said it's not one size fits all when negotiating with the local broadcasters.

"Not all station groups are created equal," he said. "Some are stronger than others."

Moonves characterized CBS' affiliate relationship as "great." While he said CBS had not yet negotiated deals on behalf of its affiliates, he said he expects partner stations to work out fair payment for their signal-and share the spoils. He believes CBS' thriving primetime, especially in the vital 10 p.m. hour that serves up viewers for local news, justifies the network's demands. "It's very important to us that our affiliate body stays strong, and it's important to us that they make very good deals," he said.

Moonves was adamant that CBS' retrans revenue has vast growth potential. "Obviously it will be larger in 2011 than it is in 2010, and will continue to grow from there," said Moonves. "As retrans grows, so does reverse comp."

A day before, Disney President/CEO Bob Iger told the same assembly that ABC affiliates will continue to share retrans in a significant way.

The CBS chief shed light on the landmark 10-year retrans pact with Comcast, which he described as both a partner and a major competitor if and when the NBC Universal merger closes. Many found both the length and the timing of the deal surprising, but Moonves said it was in the best interest of both media giants to iron out an agreement. "There are a lot of things in that contract that look toward the future," he said, mentioning VOD and TV authentication. "It gives us both a lot of flexibility...It was a great negotiation. It was a great deal for both sides."

While CBS has thus far kept its content, which Moonves referred to as "the family jewels," off the platform, the CBS chief suggested he was looking "very carefully" at the Hulu Plus subscription model, announced by Hulu CEO Jason Kilar in June.

"That's a much more interesting potential thing for us," he said. "That makes a lot more sense to us than Hulu does. I think it makes a lot more sense to a couple of partners in Hulu too."

Moonves was characteristically bullish on business, saying that political is driving local media, the network upfront was up almost double digits, and scatter is up 30% on top of that. "Literally in every single one of our advertising businesses, the prognosis is excellent," said Moonves. "We see nothing slowing it down."

He said CBS' revamped local strategy, which sees joint TV-radio websites in given markets, a la, will help keep the pace in 2011 and beyond. "I think it will be extremely lucrative," he said, "and extremely successful."

Moonves trumpeted his preferred axiom about content being king. There exist 12-14 revenue streams for a TV program these days, he said--a vastly different model from the two streams stemming from a show a decade ago.

"The bottom line to all of this," Moonves said, "is great content will make a lot of money."