CBS Corp. impressed Wall Street on Aug. 2, reporting secondquarter earnings in which its content licensing and distribution revenue grew 21% to $889 million.
That growth is largely due to groundbreaking deals struck this year by Scott Koondel, CBS senior VP of corporate licensing and distribution and CBS Television Distribution’s president of distribution, with a strong assist from his team. Even before he earned his corporate stripes in March, Koondel was constantly looking for ways to squeeze more dollars from every piece of content that CBS produces.
“The goal is to get paid every single time someone watches our content,” Koondel says. “Our obligation to the consumer is to make our content available to them, and our obligation to our shareholders is to make sure we get paid well for it.”
In July, Koondel forged a deal for CBS with Amazon that allows the upstart digital video distributor to stream some 2,000 episodes of CBS library product to Amazon Prime subscribers. In February, CBS cut a similar deal with Net! ix. Taken together, the two deals are estimated to be worth $200 million annually to CBS.
Those digital deals represent a vibrant new revenue stream for content producers, but they are additive to the lucrative distribution deals CBS already has in place. In April, Koondel and his team sold rookie drama Hawaii Five-O to TNT for an estimated $2.5 million per episode, in a deal that also allows TNT to stream the show to customers via Time Warner’s TV Everywhere initiative. In fall 2009, CBS sold another rookie drama, NCIS: Los Angeles, to USA for a similar price, and that rich deal didn’t include digital rights.
All of the new digital entrants—Netflix and Amazon in particular—represent a new frontier for television studios, and now they must figure out how to best monetize these new opportunities without damaging the studios’ long-term production businesses.
“I’m looking at all of the different divisions from 30,000 feet,” says Koondel, who is considering everything from music rights to electronic sell-through to digital video on demand. It’s a task that practically requires a crystal ball.
Koondel also made a commitment to create new business with networks not known for acquiring offnetwork product. In July, CBS sold reality program Undercover Boss to TLC and OWN to premiere next fall, even though repeats of network reality shows typically do not sell well in syndication.
“CBS is really " ring on all cylinders,” Koondel says. “There’s never been a better cohesive environment here than there is right now. We are all constantly talking and making sure that we understand everything that’s changing the business so we can adapt and prepare.”
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