Frenemies: The Epic Disruption of the Ad Business (And Everything Else) by Ken Auletta

Author:Ken Auletta [Auletta, Ken]
Language: eng
Format: epub
ISBN: 9780735220867
Amazon: 0735220867
Publisher: Penguin Press
Published: 2018-06-05T06:00:00+00:00

11.

CAN OLD MEDIA BE NEW?

Lucrative new revenue streams explain why network television, unlike financially ailing traditional media like newspapers, magazines, and radio, is not on life support. . . . By 2016, Les Moonves’s CBS was making more money than when he joined CBS twenty years before.

Les Moonves, the sixty-seven-year-old CEO and chairman of CBS, measured the success of the 2016 Super Bowl by the quantity, not quality, of the ads. It was the third most-watched Super Bowl in history, and CBS was charging $5 million per ad. “The ad sales went through the roof,” says Moonves, arms folded across a blue pin-striped suit as he relaxed in the ornate, spacious thirty-fifth-floor Black Rock office that was once founder William Paley’s. “It was the second highest day in ad revenues in the history of any media. The only time it was beat was by ourselves with the Mayweather versus Pacquiao fight,” the so-called fight of the century. “We did four hundred million dollars for the day on the Super Bowl.”

The ebullient Moonves had more than a Super Bowl to celebrate in February 2016. Under his leadership, by the end of the 2014–15 season CBS had gone from last in the early 1990s to first in the prime-time ratings race for twelve of the last thirteen years, and 2015–16 would make it thirteen out of fourteen. He was handsomely compensated for his labors, receiving a pay package in 2015 of $56.8 million. He could also celebrate that CBS was no longer 100 percent reliant on advertising. The federal government in the early ’90s initiated two measures with profound financial implications for the networks. The first came when Congress passed the Cable Act, requiring cable companies to compensate broadcasters for offering CBS and other programs on cable systems. The second was when the FCC rescinded the Financial Interest and Syndication Rules (Fin-Syn), allowing networks to own and sell their programs. In addition, unlike two decades ago, the networks no longer compensated their affiliated stations to carry their programs, and new digital platforms now paid the networks to show their programs.

By 2015, new revenue spigots enabled CBS to derive half its revenue from nonadvertising sources, including: the nearly $1 billion CBS got from retransmission consent fees paid by the cable companies and reverse compensation paid by local stations to carry network programs; the $1.5 billion CBS received from being able to syndicate and sell its programs internationally; the approximately $1 billion CBS received in 2015 from the sale of its archived programs to digital platforms like Netflix, Amazon, and Apple. Lucrative new revenue streams explain why network television, unlike financially ailing traditional media like newspapers, magazines, and radio, is not on life support. By contrast, the newspaper industry lost more than half its jobs between January 2001 and September 2016.

Les Moonves has been hailed as the Steve Jobs of television. “For me, Les Moonves represents the North Star,” Michael Kassan says, calling him “a brilliant operator. You can never lose sight of the fact that he began his career as an actor.

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