On Thursday CBS Corporation announced their fourth-quarter earnings results were up to $4 billion. While this is an all-time high for the corporation, it came a bit below market expectations mostly due to a drop revenue from content licensing and distribution. In their announcement and follow-up conference call with the investment press, CBS focused on the positive, especially with regards to the growth of the company’s two subscription streaming services, Showtime and CBS All Access, home to Star Trek: Discovery.
All Access hits 4 million subscriber goal early
The announcements from CBS revealed that they had reached their goal of 8 million subscribers combined for their two subscription streaming services. Originally the company had set this goal for 2020. During the conference call, CBS interim CEO Joe Ianniello clarified this was just for subscribers in the USA and that the split between the two is roughly 50/50, saying there was a “healthy competitive race” within the company between Showtime and All Access. This means CBS All Access has reached its goal of 4 million subscribers, something former CEO Les Moonves talked about in 2017 predicting that coming premiere of Star Trek: Discovery would be the driver to achieve that goal.
Much of the conference call was dedicated to touting the success of these services, including Ianniello saying this:
Our two primary subscription streaming services are CBS All Access and Showtime. By getting in early, we now have clear evidence that these services are working. As they continue to scale, we are outperforming our expectations as well as the targets we have previously laid out for you.
Creating new original content key to continued growth
CBS has now set a new target of 25 million subscribers (combined) by 2022. And Ianniello talked about how they see original content as the primary driver, saying:
We are hearing loud and clear that in addition to watching our content on demand and outside the home, our subscribers love our premium content and they want more of it. So, our focus is squarely on delivering that to them. At All Access, we went from three original in 2017, to seven originals in 2018. And here in 2019 we will be adding four more to get us to eleven.
He also highlighted Star Trek’s contribution to the 2019 CBS All Access slate:
All Access we kicked off 2019 in a big way with season 2 premiere of Star Trek: Discovery. Next month The Good Fight returns and on April 1, Oscar winner Jordan Peele will take us to another dimension with the highly anticipated premiere of The Twilight Zone. Later this year, we’ll add a true crime drama called Interrogation and a dark comedy called Why Women Kill from Marc Cherry the creator of Desperate Housewives which stars Lucy Liu. And we’ll end 2019 by coming full circle with the launch of a new Star Trek series starring Sir Patrick Stewart as legendary captain Jean Luc Picard.
In a not so subtle way of poking at upcoming streaming services from media giant competitors Disney, NBC Universal, and Warner Brothers, Ianniello made it clear that All Access and Showtime were a key component to the future of CBS:
Our direct to consumer services are our future. Where others are just announcing their ambitions, we are hitting our stride, poised to take significant leaps head.
It is clear from the statements coming out of CBS that they see direct-to-consumer streaming services as vital and they are willing to devote more and more resources to them, especially in light of long-term trends with declining broadcast advertising revenue. The above comments add more context to why executives from CBS and All Access have been talking up their plans for expanding Star Trek offerings on All Access with more original content to both help grow the service, as well as giving subscribers reasons to stick around.
All Access content could end up on CBS Network (eventually)
A topic that came up during the Q&A portion of the call was if CBS might consider putting some of the original CBS All Access content on to the CBS broadcast network. Ianniello revealed that there have been some discussions of this, with regards to how they usually license their shows for later syndication. He used The Good Fight, which was first original show on All Access and therefore likely the first one to be considered for this kind of distribution, as a potential example, saying:
The great part about owning the intellectual property is that you have a choice. For instance just how the syndication business has proven to be extremely valuable over the years. It is not a new business, but historically we have taken shows off-net after three or four years and put them on cable networks and/or streaming services to drive awareness back to the broadcast network. When we look at a Good Fight for example and we see a few million people have watched The Good Fight given that it is exclusively on All Access, what if we took season one of The Good Fight and put it on the CBS broadcast network to drive subscribers back to All Access?
What that all means is that after a few seasons, it’s possible the first season of Discovery could end up broadcast on CBS. Of course, the first hour of the pilot was shown on CBS as a form of promotion when the show premiered in the fall of 2017, but something like this would be for a full season. While it is hard to see older seasons of Discovery delivering enough ratings for regular CBS primetime, it could possibly fit into the summer schedule when the network often runs more genre fare.
Netflix Discovery deal seen as a model for more licensing revenue
Regarding the subject of licensing revenue, the CBS chief again brought up Star Trek with regard to how they are approaching international deals, saying:
We are benefited from the lucrative business of licensing our content to third parties. Selling Star Trek: Discovery to Netflix internationally while streaming it exclusively here in the US on All Access is emblematic of this strategy and provides for interesting opportunities for us going forward.
The world is still waiting to hear how CBS will distribute the upcoming Picard show outside of the USA. While the deal with Netflix gives the streaming giant first look at any spin-off shows from Discovery, the Picard series is considered something separate. Although it would not be surprising if Netflix still ended up being the primary international partner for the upcoming Star Trek show featuring Sir Patrick Stewart.
No merger talk
One thing that the CBS top brass on the call would not talk about was the potential merger with Viacom. When asked about it Ianniello deferred, saying it was up to the board of directors and he and his team were focused on running the company. Regardless, industry analysts still consider a re-merger of CBS and Viacom (parent company of Paramount Pictures) as inevitable, and likely happening sometime in 2019. The CBS/Viacom combination is not considered the end, rather it is just one of a number of potential deals, which could also include mergers or acquisitions with Discovery Networks, Lionsgate, and/or Sony Pictures. And there has also been reporting of CBS – or CBS merged with some of these other entities – being scooped up by a tech giant in search of content like Amazon, Apple, or Verizon.
The bottom line is the two entities that share Star Trek (CBS and Paramount) are potentially going to go through some more corporate changes in the next few years.
Keep up with all the CBS and Paramount corporate news here at TrekMovie.com.