No Signs of Ad Slowdown at CBS, Moonves Says

CBS is still not seeing any signs of an advertising
slowdown, CEO Les Moonves told an investors' conference Wednesday.

"I know people are saying it should be slowing down;
we're just not seeing it," Moonves said at the Bank of America Merrill Lynch
Media, Communications & Entertainment conference. "I know the economy is
suffering right now," he added, "Smart guys realize the way to cut back is not
by reducing advertising."

Moonves said that upfront "holds" are being converted
into firm orders at the same rates as last year. Those advertisers that left
were quickly replaced at higher rates. Other upfront advertisers are increasing
their orders and new advertisers are coming into the scatter market.

He said he expects CBS to do well in the scatter market
in the fourth quarter and first quarter because CBS has only five new shows in
its lineup, while its rivals have more new shows on their schedules. "I
anticipate we're going to be very much in demand by the first quarter," he
said. "I know we're the boring network, we're the stable network and we just

He's also expecting political advertising to be a big
factor in 2012. "Judging from the climate that's out there, there is going to
be such a huge amount of money spent. 2012 is going to break records and outdo
2010 by a considerable amount," he said. "It may not be good for the country,
but it's going to be good for CBS."

CBS also has revenue coming in from retransmission
consent agreements with cable, satellite and telco distributors, as well as
from reverse compensation deals with affiliates. Moonves said he expected
reverse compensation to reach meaningful levels of revenue in 2014 and 2015.
"Next month we'll announce a significant deal with a big affiliate. It's
concluded," he said. "It's a substantial deal because they have already
negotiated their deals with the MSOs and we're going to be sharing that with

On the digital front, Moonves said not joining Hulu was
"one of the smartest things we've done." He said he didn't like to be in joint
ventures with rivals -- it is owned by News Corp., Disney and NBCUniversal --  and that by keeping its content on its own
website, CBS keeps 100% of the ad revenue generated, rather than 70%. It also
has more control over its programming. "Overusing content online might hurt
ratings on the other networks. I like the way we're playing the game."

CBS has played the game by making non-exclusive deals
with digital distributors Netflix, Amazon and even Hulu in Japan. Moonves said
CBS' Netflix deal covered about 7% of its vast library and brings in hundreds
of millions in revenue.

"Netflix is another means of distribution. I'm very happy
to sell our content to USA, TBS and Netflix," Moonves said. He added that he
didn't know how many digital distributors the marketplace could support, but "the
more the merrier. We like selling our content to everybody."

Moonves said the key to the TV business is owning programming.

"Content is forever. We made over $20 million a year on
revenue from I Love Lucy. It is a
show that was last produced in 1957," he said. "Fifty years from now there will
be some other guy sitting in this chair and he'll be selling CSI."

While Moonves was his usual optimistic self, analyst
Anthony DiClemente of Barclays Capital slightly lowered 2011 earnings estimates
for CBS.

DiClemente cited lower network ad revenue growth because
of rerun programming in the third quarter and slower revenue growth in dayparts
other than primetime, tough political comparisons for CBS' local broadcasting
segment, and lower traditional syndication revenues.

"While our 2011 [earnings per
share] estimate goes to $1.90 from $1.97, our below-consensus 2012 EPS estimate
of $2.18 remains unchanged, as we believe a cyclical slowdown in ad revenue
growth is already reflected in our assumptions. Thus, we are also maintaining
our price target of $30," he said in a research report.

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.