Our in-house CBS analyst tells us that CBS has put a rare right foot forward in its new deal with Verizon Communications. Like all new cable channels, Verizon’s Fios TV (yes, that’s really the name) needs content. The solution? Pay CBS approximately fifty cents a subscriber for the privilege of, yes, broadcasting network content.
Though both parties are mum on the actual fee structure, Leslie Moonves is chortling and rubbing his hands together. Verizon is a little more subdued:
Verizon spokesman Eric Rabe wouldn’t confirm that the company is paying fees. “Value flows both directions,” he said.
Unlike ABC, CBS is standalone company — no cable network behind it to provide back rubs and rebroadcasts. Since lost advertising dollars are into production money, Moonves and team needed to get creative with cash flow in order to produce more product (also, bump up executive bonuses, but that’s probably a side consideration, this being Hollywood and all). Getting cable networks to pay on a per-subscriber basis for content is, actually, a pretty smart move (so smart, CBS is negotiating with AT&T in the same manner). Whether other cable operators fall for the same trick remains to be seen.
Verizon will pick up CBS-owned stations in various markets, approximately 18 stations.