UBS 38th Annual Global Media and Communications Conference Outlook For The Broadcast Networks David F. Poltrack Chief Research Officer, CBS Corporation President, CBS Vision 1
This is more like it! 2
The Outlook Outlook for 2011 The Audience Situation The Longer-Term Outlook for Television Advertising The Television Network System The New Distribution Options 3
The Outlook Outlook for 2011 The Audience Situation The Longer-Term Outlook for Television Advertising The Television Network System The New Distribution Options 4
Original 2010 Forecast Network Television Revenues +5.0% Underlying Growth Rate +3.0% 5
Revised 2010 Forecast Network Television Revenues +6.2% Underlying Rate +4.6% 6
The Current Market Strong Upfront Even Stronger Scatter Market Watching the Consumer 7
The Current Market Strong Upfront Even Stronger Scatter Market Watching the Consumer 8
The Current Market Strong Upfront Solid first half scatter market fuels 2010-2011 2011 Upfront demand Return to normal spending levels by auto advertisers adds to Upfront base Networks return to normal Upfront unit sales levels 9
The Current Market Strong Upfront Even Stronger Scatter Market Watching the Consumer 10
The Current Market Even Stronger Scatter Market Gradual economic improvement and big marketing battles push Scatter prices up 20%+ versus Upfront 11
The Current Market Strong Upfront Even Stronger Scatter Market Watching the Consumer 12
The Current Market Watching the Consumer Consumer spending has grown at a progressively faster rate during the past three quarters In the 3 rd Quarter, consumer spending on durable goods was up +6% despite the presence of the Cash for Clunkers stimulus in 2009 Corporations are closely watching this trend and they have increased their investments in equipment and software, an indication of their growing confidence in the continuation of this increased consumer spending. 13
2011 Forecast Network Television Revenues +3.4% Underlying Rate +5.0% 14
The Outlook Outlook for 2010 The Audience Situation The Longer-Term Outlook for Television Advertising An update on the Television Network System TV Everywhere 15
The Outlook Outlook for 2010 The Audience Situation Audience Deficiencies 16
Primetime Year-Over Over-Year First 9 Weeks Most Current +1% +4% +2% +3% +2% +3% +6% +4% -5% -4% -8% -6% -17%-16% -16% -19% CBS NBC ABC FOX HH Rtg PER2+ A25-54 Rtg A18-49 Rtg Source: NTI, 9/20/10-11/21/10 vs year ago; All Programs; Most Current Data 17
Primetime Year-Over Over-Year First 7 Weeks Live+7 +4% +6% +5% +6% +4% +5% +3% +4% -5% -3% -5% -9% -18% -18%-20% -21% CBS NBC ABC FOX HH RTG PER 2+ A25-54 RTG A18-49 RTG Source: NTI, 9/20/10-11/7/10 vs year ago; All Programs; Live+7 Data 18
Primetime Year-Over Over-Year First 7 Weeks - C3 +3% +4% +2% +3% +3% +5% +1% +3% -4% -4% -5% -7% -16% -16%-18% -20% CBS NBC ABC FOX Households Persons 2+ A25-54 A18-49 Source: NTI, 9/20/10-11/7/10 vs year ago; All Programs; C3 Data 19
Primetime Top Show Performance First 6 Weeks Top 10 Top 20 +3% +4% +3% +4% +1% +4% +3% N.C. N.C. +1% +2% N.C. -2% -4% -4% -5% Live+7 C3 Live+7 C3 Households Viewers A25-54 A18-49 Source: NTI, 9/20/10-10/31/10 vs. same period last year; Live+7 20
The Outlook Outlook for 2010 The Audience Situation Audience Deficiencies The Impact of the DVR 21
Primetime DVR Penetration Trend 100% 90% 80% 70% 60% 50% 40% 30% 21% 29% 34% 38% 20% 11% 10% 0% Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Source: NTI Sample Penetration 22
Primetime Total Viewers (m) 2010-11 11 Season-to to-date (Live+7 vs.. Live +Same Day vs. Live) 10.3 11.3 +1.00 12.8 +1.50 7.2 7.8 +0.53 8.5 +0.73 8.3 9.1 10.0 +0.79 +0.91 5.7 6.4 +0.71 7.3 +0.87 CBS NBC ABC FOX Live Live+SD Live+7 Source: NTI, 9/20/10-11/7/10, Per 2+ Millions 23
Primetime Adults 18-49 Ratings 2010-11 11 Season-to to-date (Live+7 vs.. Live +Same Day vs. Live) 3.4 2.8 +21% 3.0 2.9 2.7 2.8 2.6 2.4 2.4 +11% +12% +17% 2.4 +13% 2.2 +17% +18% 2.0 +20% CBS NBC ABC FOX Live Live+SD Live+7 Source: NTI, 9/20/10-11/7/10 24
DVR Impact Three Year Trend DVR PENETRATION Primetime All DVR Playback* Primetime - All DVR Playback 4.1 HHLDS +29% 5.3 29% 34% 38% 3.1 +19% 6.3 A18-49 +29% +13% 4.0 4.5 2008-09 2009-10 2010-11 DVR PENETRATION 2010-11 2009-10 2008-09 Source: NTI, 9/20/09-11/7/10; CBS, NBC, ABC, FOX 25
Primetime DVR Penetration Impact DVR Playback by Hour 9-10 PM 9-10 PM Source: NTI, 9/20/10-11/7/10 26
Primetime DVR Playback Lift Rank 2010-11 11 Season-to to-date Total Viewers Program Title Network LIVE+7 PER2+ (000) LIVE PER2+ (000) Lift MODERN FAMILY ABC 15,087 9,622 5,465 GREY'S ANATOMY ABC 15,044 9,971 5,073 BIG BANG THEORY, THE CBS 15,354 10,652 4,702 GLEE FOX 13,181 8,503 4,678 NCIS CBS 21,931 17,421 4,510 HOUSE FOX 11,541 7,505 4,036 MENTALIST, THE CBS 17,675 13,685 3,990 HAWAII FIVE-0 CBS 14,707 10,762 3,945 CRIMINAL MINDS CBS 16,489 12,585 3,904 SURVIVOR: NICARAGUA CBS 13,564 9,688 3,876 DESPERATE HOUSEWIVES ABC 14,300 10,563 3,737 OFFICE NBC 9,508 5,837 3,671 TWO AND A HALF MEN CBS 15,834 12,221 3,613 CASTLE ABC 13,419 10,056 3,363 CSI CBS 16,174 12,821 3,353 BONES FOX 11,463 8,227 3,236 EVENT NBC 9,598 6,388 3,210 NCIS: LOS ANGELES CBS 17,984 14,840 3,144 GOOD WIFE, THE CBS 14,667 11,592 3,075 Source: NTI, 9/20/10-11/14/10; Live+7 vs. Live [Lift of 3 million viewers or more] 27
Primetime C3 Ratings Adults 18 Adults 18-49 2010-11 11 Season-to to-date (All Programs, Excludes Sports and News Specials) 2.4 2.8 2.7 1.5 1.8 1.7 2.3 2.7 2.5 1.9 2.2 2.3 CBS NBC ABC FOX LIVE LIVE+SD C3 Source: NTI, 9/20/10-11/7/10; C3=Live+3 Commercial Ratings Weighted by Commercial Seconds 28
Primetime C3 Ratings Adults 25 Adults 25-5454 2010-11 11 Season-to to-date (All Programs, Excludes Sports and News Specials) 3.2 3.7 3.5 2.9 3.4 3.1 1.9 2.2 2.1 2.0 2.4 2.4 CBS NBC ABC FOX LIVE LIVE+SD C3 Source: NTI, 9/20/10-11/7/10; C3=Live+3 Commercial Ratings Weighted by Commercial Seconds 29
Nielsen To Count Repeat Viewing in 2011 Impact on Primetime Live+7 Ratings 6.1 6.4 +5% Four-Broadcast Network Averages 3.1 3.2 +3% 3.4 3.6 +6% Households A18-49 A25-54 Source: NTI NPower, 9/20/10-10/17/10; Live+7 Data 30
Nielsen To Count Repeat Viewing in 2011 Impact on Primetime C3 Ratings Four-Broadcast Network Averages 5.13 5.23 +2% 2.44 2.48 +2% 2.95 3.00 +2% Households A18-49 A25-54 Source: NTI NPower, 9/20/10-10/17/10; C3 Data 31
DVR Playback Beyond 7 Days In DVR Households Primetime - Percent of DVR Playback Audience That is Uncounted A18-49 9.9 9.6 8.8 9.5 2006 2007 2008 2009 Source: Nielsen Custom Analysis, October, CBS, NBC, ABC, FOX 32
DVR Playback Beyond 7 Days In All Households Primetime - Percent of DVR Playback Audience That is Uncounted A18-49 1.1 2.4 2.6 3.5 2006 2007 2008 2009 Source: Nielsen Custom Analysis, October, CBS, NBC, ABC, FOX 33
Primetime C3 Season-to to-date 2010-11 11 vs. Year Ago +3% +4% +2% +3% +3% +5% +1% +3% -4% -4% -5% -7% -16% -16%-18% -20% CBS NBC ABC FOX Households Persons 2+ A25-54 A18-49 Source: NTI, 9/20/10-11/7/10 vs year ago; All Programs; C3 Data 34
The Outlook Outlook for 2010 The Audience Situation Audience Deficiencies The Impact of the DVR The Cable Network Competition 35
Factors in Cable Audience Growth Penetration Proliferation Programming 36
Factors in Cable Audience Growth Penetration Growth 85% 91% 2005-06 2009-10 Cable+Satellite U.S. Penetration Source: NTI, Cable+ADS Penetration, Broadcast Year Averages 37
Factors in Cable Network Channel Proliferation 96.4 130.1 2005-06 2008-09 * Number of Channels Receivable Source: NTI, Television Audience Reports * 2008-09 was the final year Nielsen reported Channels Receivable 38
Primetime First-Run Cable Series Trend 2009-10 vs. 2005-06 06 2009-10 2005-06 Most Viewed Cable Show (Rizzoli & Isles) 8.18m Rank = 51 Most Viewed Cable Show (The Closer) 4.79m Rank = 188 56 Cable Shows with more Viewing than Least Viewed BC Show 2.59m Rank = 204 9 Cable Shows with more Viewing than Least Viewed BC Show 3.13m Rank = 222 Source: NTI, 9/21/09-9/19/10 vs. 9/19/05-9/17/06 39
Primetime Cable C3 Season-to to-date 2010-11 11 vs. Year Ago Ad-Supported Cable Networks Plus Minus Same Adults 18-49 6 8 26 Adults 25-54 8 8 24 Source: NTI, 9/20/10-11/7/10 vs. 9/21/09-11/8/09 40
Primetime C3 Weighted Share of A25 2010-11 11 Season-to to-date vs. Year Ago Weighted Share of A25-54 54 Audience 2010-11 11 2009-10 34.8% 65.2% 33.1% 66.9% CBS All Other Broadcast CBS All Other Broadcast Source: NTI, 9/20/10-10/31/10 vs. 9/21/09-11/1/09 41
Primetime C3 Weighted Share of A18 2010-11 11 Season-to to-date vs. Year Ago Weighted Share of A18-49 Audience 2010-11 11 2009-10 32.0% 68.0% 30.0% 70.0% CBS All Other Broadcast CBS All Other Broadcast Source: NTI, 9/20/10-10/31/10 vs. 9/21/09-11/1/09 42
Primetime C3 Weighted Share of A25 2010-11 11 Season-to to-date vs. Year Ago Weighted Share of A25-54 54 Audience 2010-11 11 2009-10 75.0% 76.1% 25.0% 23.9% CBS ALL OTHER CBS ALL OTHER Source: NTI, 9/20/10-10/31/10 vs. 9/21/09-11/1/09 [All Other = NBC, ABC, Fox, CW, Top 10 Ad-Supported Cable Networks] 43
Primetime C3 Weighted Share of A18 2010-11 11 Season-to to-date vs. Year Ago Weighted Share of A18-49 Audience 2010-11 11 2009-10 78.6% 79.4% 21.4% 20.6% CBS ALL OTHER CBS ALL OTHER Source: NTI, 9/20/10-10/31/10 vs. 9/21/09-11/1/09 [All Other = NBC, ABC, Fox, CW, Top 10 Ad-Supported Cable Networks] 44
Primetime Share of Playback Audience 2010-11 11 S-T-D S - Broadcast Networks and Ad-Supported Cable A18-49 69% 31% Broadcast Networks Ad-Supported Cable Networks Source: NTI, 9/20/10-10/31/10 45
Primetime Share of Playback and Live Audience 2010-11 11 S-T-D S - Broadcast Networks vs. Ad-Supported Cable A18-49 PLAYBACK LIVE 69% 31% 40% 60% Broadcast Networks Ad-Supported Cable Networks Broadcast Networks Ad-Supported Cable Networks Source: NTI, 9/20/10-10/31/10 vs. 9/21/09-11/1/09 46
The Outlook Outlook for 2010 The Audience Situation Audience Deficiencies The Impact of the DVR The Cable Network Competition Sports Franchises 47
NFL Broadcast vs. Cable GRP Distribution 2006-09 09 vs. 2000-2005 2005 2006-2009 2000-2005 83% 17% 88% 12% Broadcast Cable Broadcast Cable Source: NTI, NFL Regular Season, Gross Rating Points, Households 48
NFL Broadcast GRP Trend 2000-2009 2009 790 748 767 764 752 749 737 739 725 787 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: NTI, NFL Regular Season, Gross Rating Points, Households 49
NFL Ratings Year-Over Over-Year 2010 vs. 2009 CBS NBC FOX ESPN +13% +9% +2% -1% Households Source: NTI, NFL Regular Season, 11 Weeks 50
MLB Broadcast GRP Trend GRP Distribution 2007-10 vs. 2001-2006 2006 2007-2010 2001-2006 57% 43% 88% 12% Broadcast Cable Broadcast Cable Source: NTI, NFL Regular Season, Gross Rating Points, Households 51
MLB Broadcast GRP Trend 2001-2010 2010 249 196 293 244 175 166 154 151 169 148 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: NTI, MLB Post Season, Fox/ESPN, Fox/TBS; Gross Rating Points, Households 52
The Outlook Outlook for 2011 The Audience Situation The Longer-Term Outlook for Television Advertising The Television Network System The New Distribution Options 53
Television Viewing At Historic Highs 2009-10 vs. 2008-09 2008-09 vs. 2001-02 Households n.c. +8% Children +3% +8% Teens +2% +8% Adults 18-34 -1% +8% Adults 35-54 +0% +9% Adults 55-64 +0% +12% Adults 65+ -1% +6% Source: NTI, Broadcast Year Averages Huts/Puts for Mon-Sun Total Day 54
Television Advertising Effectiveness 55
EMPIRICAL EVIDENCE OF TV ADVERTISING EFFECTIVENESS Joel Rubinson Chief Research Officer Advertising Research Foundation 56
Findings TV is as effective as ever, possibly even increasing in effectiveness, in terms of unit sales lift from incremental GRP pressure. TV is effective in generating sales in particular by generating awareness. Source: ARF, EMPIRICAL EVIDENCE OF TV ADVERTISING EFFECTIVENESS Study 57
Research Support Needed Throughout the Marketer s s Decision Making Chain Marketer Decides How Much: Marketing budget goes to advertising Advertising investment goes to television Television budget goes to broadcast network television Broadcast budget goes to each network 58
Research Support Provided Across the Marketer s s Decision Making Chain Impact of a 1% change on a Broadcast Network s s revenues $1,000,000,000 $900,000,000 $800,000,000 $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 $180,000,000 $200,000,000 $190,000,000 $220,000,000 Broadcast Network Broadcast-Cable TV Advertising-TV Advertising Marketing-Advertising 59
Advertising and Marketing Expenditures Year Total Marketing Spending Advertising Television Broadcast Networks $ Billions % of Total Marketing % of Total Advertising % of Total Television Advertising 1997 650 27.2 25.8 28.5 2002 880 24.0 26.7 26.6 2007 1,080 24.0 26.5 24.2 2008 1,065 23.3 27.5 24.6 2009 975 21.8 28.6 25.1 Source: Wilkofsky Gruen Associates, Inc. 60
Advertising and Marketing Expenditures Year Total Marketing Spending Advertising Television Broadcast Networks $ Billions % of Total Marketing % of Total Advertising % of Total Television Advertising 1997 650 27.2 25.8 28.5 2002 880 24.0 26.7 26.6 2007 1,080 24.0 26.5 24.2 2008 1,065 23.3 27.5 24.6 2009 975 21.8 28.6 25.1 2010 1,015 22.7 29.3 24.2 Source: Wilkofsky Gruen Associates, Inc. 61
62
Food Brand A Multivariate Prime vs. All Other Dayparts For the first five brands analyzed there is an ROI advantage for Primetime over all other dayparts. In the case below, the premium programs bought in Prime (e.g. Olympics, Emmys) drove up price (CPM) above normative levels but Primetime Sales Effectiveness more than compensated. The recession-driven flight from primetime is probably doing more harm than good. 2.0 1.5 1.0 0.5 1.31 1.03 Prime All Other 0.0 Source: TRA Single Source Los Angeles May 2008-October 2008 Multivariate analytics controls for price/promotion, baseline and seasonality Sample size: Total Static Brand Purchasers (6 months) = 5433 63
Shampoo Brand: ROI by Ad Frequency Recency Effect: Every other day commercial exposure maxes ROI for 4 of first 5 brands analyzed. $0.07 $0.08 $0.40 Multivariate ROI $0.24 Freq. 1 2 3 4+ Frequency generated within households across time (weeks) ROIs calculated using multivariate model Confidence levels: 1-75%, 2 55%, 3 98%, 4 98% Source: TRA Single Source Los Angeles: May 2008 - October 2008 Sample size: Total Static Brand Purchasers (6 months): Brand 963 Multivariate Model Controls for Price, Promotions, Seasonality and Trend 64
Programs Which Index Above Average Against Brand HSPs Among Those Programs on the Original Schedule Significantly Over-deliver ROI HSP Index Cutoff Based on Distribution to Maximize Statistical SignificanceS Beverage Brand A $2.04 Total Programs (90%) ROI + 50.5 % $3.07 (90%) HSP Index 120+ Programs + 222.9% (75%) Beverage Brand B (99%) Beverage Brand C $0.23 (90%) + 600 % $1.61 (80%) Total Programs HSP Index 105+ Programs Model Controls for Price, Promotions, Seasonality and Trend ( ) Significance level Source: TRA Single Source Los Angeles: May 2008-October 2008 Sample size: Total Static Brand Purchasers (6 months): Bev Brand A=7,235 Bev Brand B=24,229 Bev Brand C=1,147 65
Introduction to Nielsen Catalina Ventures
Nielsen Catalina Ventures (NCV) The Nielsen Company and Catalina Marketing formed a joint venture to create the industry s most comprehensive ROI measurement and advanced analytics service Links media audience data with actual purchase data Partnering with Retailers and Set Top Box data providers Establishes direct link between what consumers view and what they buy Industry s leading provider of media and marketing measurement services Providing nationally representative media audience data and all-outlet consumer purchase data Industry s leading provider of consumer driven marketing programs Powered by the world s largest shopper data warehouse 67 Copyright 2010 The Nielsen Company. Confidential and proprietary.
Breakthrough Targeting and ROI Capability Buy Data scale All outlet Single Source + Demo graphics Watch Data scale Weekly Shopper Purchase Transactions Long term Static Longitudinal Purchase Panel Measure ROI Develop Brand Target Television People Meter Set Top Box HH Tuning Attitudinal segments Buy Assets Catalina Frequent Shopper Data o 10+ Major Retailers in US o 60 million households Nielsen Homescan Panel Deliver Brand Ratings Currency Watch Assets Nielsen NPM and Set Meter Panels Nielsen Online Panel Set Top Box Data 68 Copyright 2010 The Nielsen Company. Confidential and proprietary.
The Outlook Outlook for 2011 The Audience Situation The Longer-Term Outlook for Television Advertising The Television Network System The New Distribution Options 69
The Broadcast Network Television System 70
Franchise Programs 71
Franchise Program Trend 1990-2000 (Total = 45) 2000-2010 2010 (Total = 38) 10 6 4 15 4 11 10 10 1 2 5 7 5 17 4 2 7 7 10 3 4 1 3 6 1 3 4 1 2 CBS NBC ABC FOX Comedy Drama Reality CBS NBC ABC FOX Comedy Drama Reality Potential Note: Franchise Series defined as: broadcast for five plus seasons, top-rated, sold in syndication 72
Network Licenses + International Sales = Profitability on Day One GLOBAL (Canada) HAWAII FIVE-0 is the #1 new show in Canada Premiere on Global was the #2 show of the day in Adults 25-54 Ranks #1 in its time period with total viewers, and several key adult demos AXN (Southeast Asia) Premiere led AXN to the #1 rated channel among all ad-supported international channels in the Southeast Asian market. Improved over the 2010 year-to-date timeslot average by +129% in Singapore, +200% in the Philippines and +202% in Malaysia. Liv (Latin America) Premiere pushed Liv into the top 10 among all pay TV channels in Brazil and Colombia. Ranked #1 among Men in Columbia 73
Network Licenses + International Sales = Profitability on Day One 74
Primetime Top 20 Cable Shows Produced by Studios Owned by Broadcast Networks 2009-10 75.0% 25.0% Broadcast Studio Other Source: Nielsen, 9/21/09-9/19/10; Persons 2+ (000); Live+7 Data 75
Off-Broadcast Network Repeats on Cable Garner More Audience Than Top-Rated First-Run Cable Shows Off-Broadcast First-Run Cable 62% 38% Source: Nielsen, 9/21/09-9/19/10; Persons 2+ (000) Primetime GRP s; Live+7 Data 76
Broadcast Networks Retransmission consent fees Programming Content for distribution over the web controlled by MSOs Affiliate fees Reverse affiliate comp O&O s Affiliates TV Everywhere TV Stations TV Stations Over The Top Delivery. Advertiser Supported Tier Subscription Based Tier Hulu Plus Owned And Operated Websites ABC.com, CBS.com, NBC.com, Fox.com Scott Koondel / President of Distribution 77
Life of a Series Original Network Airing Rental SVOD Syndication International Domestic Broadcast 2 nd cycle Back-end Library Owned & Operated VOD TV.com? plus Traditional DVD Day of Air 1 to 4 Days Later 7 Wks 10 Weeks 10 Months 1 yr 3-4 yrs 8-12 yrs? TV Everywhere Domestic Cable Cable Retrans Affiliate Fees Summer Repeat Plus Prior Season Holdbacks Cable Network Early Exhibition Scott Koondel / President of Distribution 78
The Powerful Reach of CBS LOCAL Adults 18+ Reach September 2009-August 2010 82% 81% 3% 4% 85% 81% 3% 7% 85% 4% 76% 82% 6% CBS Web CBS Radio CBS TV 58% 60% 63% 49% 58% 6% 45% 53% 61% 56% 60% 65% 64% 58% 67% New York L.A. Chicago Philadelphia Dallas San Francisco Boston Source: Scarborough Research, PRIME NExT -- Crosstab Report 79
Local News Advertising Positioning Opportunities Presentation to: CONFIDENTIAL AND PROPRIETARY Copyright 2010 by Frank N. Magid Associates, Inc. Any duplication, reproduction, or usage of this document or any portion thereof without the written consent of the firm is prohibited. 80
Open Mobile Video Coalition Project Roadblock: Mobile Advertising Case Study Promising Results of Test of Mobile Digital Television: Local News Major Program Attraction Major Impact for Drunk Driving PSA Carried in Mobile Digital Programming 81
The Outlook Outlook for 2011 The Audience Situation The Longer-Term Outlook for Television Advertising The Television Network System The New Distribution Options 82
New Distribution Options Threat or Opportunity? 83
New Distribution Options Opportunity! 84
Current Distribution Options Only partial monetization of viewers with advertisers Only minimal share of subscription revenues WE CAN DO BETTER THAN THIS! 85
The Total Television Audience vs. The Total Saleable Audience Primetime The Total Television Audience 14,702 89% 13,127 75% 34% Total Viewers Total Viewers 11,028 Total Viewers 4,949 A18-54 Total Audience In-Home Program Audie nce In-Home Commercial Audience "Saleable" In-Home Commercial Audience Source: Nielsen, CBS Primetime 2010-11, (000); 9/20/10-10/10/10 86
The Total Television Audience vs. The Total Saleable Audience Primetime The Total Television Audience Total TV Audience, 14,702,000 Saleable A18-54 C3 Audience, 4,949,000 34% Source: Nielsen, CBS Primetime 2010-11, ; 9/20/10-10/10/10 87
Total Television Subscription Revenues $67 Billion Total TV Subscription Revenue 88
Total Television Subscription Revenues $67 Billion $1 Billion Total TV Subscription Revenue Broadcast Retransmission Fees 89
New Distribution Options 90
Video Market Segmentation CONVERGENCE CONCEPT Fully Connected TV Centric Web Centric Old School 91
Video Market Segmentation TOTAL ADULTS SPRING 2006 TV Centric DIGITAL TV, NO BROADBAND 24% 25% 16% Fully Connected DIGITAL TV AND BROADBAND Web Centric BROADBAND, NO DIGITAL TV Old School 35% NO DIGITAL TV, NO BROADBAND Source: MRI, Spring 2006 92
Video Market Segmentation TOTAL ADULTS SPRING 2009 TV Centric DIGITAL TV, NO BROADBAND 17% 46% 17% Fully Connected DIGITAL TV AND BROADBAND Web Centric BROADBAND, NO DIGITAL TV Old School NO DIGITAL TV, NO BROADBAND 20% Source: MRI, SPRING 2009 93
Video Market Segmentation TOTAL ADULTS SPRING 2010 TV Centric DIGITAL TV, NO BROADBAND 16% 50% 17% Fully Connected DIGITAL TV AND BROADBAND Web Centric BROADBAND, NO DIGITAL TV Old School 17% NO DIGITAL TV, NO BROADBAND Source: MRI, SPRING 2010 94
Video Market Segmentation OWN A DVR SPRING 2010 76% (159) Fully Connected DIGITAL TV AND BROADBAND 7% (40) Web Centric BROADBAND, NO DIGITAL TV 15% (90) TV Centric DIGITAL TV, NO BROADBAND 2% (10) Old School NO BROADBAND, NO DIGITAL TV Source: MRI, Spring 2010; Percent that Own a DVR, ( ) Index to Total U.S. 95
Video Market Segmentation GROWTH OF FULLY CONNECTED 52% 57% 52% 29% 30% 22% 29% 8% A18-34 A35-54 A55-64 A65+ Source: MRI, Spring 2010 vs Spring 2006 96
Internet Video Goes Mainstream Internet Video Goes Mainstream Broadband Penetration May 2010 Broadband, 73.0% Non- Broadband, 28.0% Source: NTI sample based Universe Estimates 97
Video Streaming Activity Watch TV Content Online - Frequency 17% 23% 17% 26% 10% 13% 2009 2010 Daily Weekly Monthly Source: Horowitz Multiplatform Content & Services, 2010 98
Video Streaming Activity Watch TV Content Online - Frequency 28% 33% 40% 37% 7% 10% 13% 13% 2007 2008 2009 2010 Regularly Stream Occasionally Stream Source: CBS Entertainment Panel, Fall each year 99
Video Streaming Activity Streamed Primetime Program They Watched Percent Streamed - All Respondents 5% 6% 6% 2008 2009 2010 Source: CBS Entertainment Panel, Fall each year 100
Video Streaming Activity Streamed Primetime Program They Watched Percent Streamed - By Demo 7% 7% 2% 8% 3% 3% 2008 2009 2010 A18-49 A50+ Source: CBS Entertainment Panel, Fall each year 101
Video Streaming Activity Streamed Primetime Program They Watched Percent Streamed - By Fully Connected 5% 6% 6% 6% 6% 5% 2008 2009 2010 ALL A18-49 Source: CBS Entertainment Panel, Fall each year Fully Connected defined as having both digital television and broadband in the home 102
Video Streaming by Source Streamed or downloaded on a computer, mobile device, or Internet,, after the episode aired on TV on TV 2008 2009 2010 Total Sample 5% 6% 6% Fully Connected 5% 5% 5% A18-49 7% 7% 8% A50+ 2% 3% 3% Highest 12% 17% 13% Highest Shows: Terminator: Sarah Connors Gossip Girls One Tree Hill, Vampire Diaries Source: CBS Entertainment Panel Survey, Fall 103
Internet Video Goes Mainstream TELEVISION VIEWING PLUS STREAMING - CUME AUDIENCE 100% 1.1% 1.7% 80% 60% 40% 98.9% 98.3% 20% 0% Total U.S. HHLDS Broadband HHLDS TV Streaming Source: Nielsen People Meter, VideoCensus; May 2009 104
Television and the Internet A New Broadcast Network Television Model? 105
A New Broadcast Network Television Model? Current Model Ad Value Live 10 Minutes of Ads = 20 Ads x.95 19.0 DVR Playback 10 Minutes of Ads = 20 Ads x.44 8.8 OnLine Streaming 2 Minutes of Ads = 4 Ads x 1.00 4.0 106
A New Broadcast Network Television Model? If you were going to watch a TV program online and were presented with the following two options, which option would you choose? Total A 18-34 A 35-54 A 55+ Sample Size: N= 3495 711 1742 1012 Watch the program without commercials for $1.99 8% 4% 8% 9% Watch the program with commercials for free 92% 96% 92% 91% All Age Source: CBS Entertainment Panel Survey, July 2009 107
A New Broadcast Network Television Model? Currently, most TV programs offered on the Internet for free contain fewer commercials than when the programs are seen on TV. If a program that you wanted to watch were offered free on the InternetI but contained the same amount of commercials that the program has when seen on TV, would you Total A 18-34 A 35-54 A 55+ Sample Size: N= 3223 681 1597 916 Still watch for free 96% 94% 96% 97% Pay $1.99 to watch without commercials 4% 6% 4% 3% All Age Source: CBS Entertainment Panel Survey, July 2009 108
A New Broadcast Network Television Model? Viewing, Ads Served and Retention are all Up! STD 10 STD 09 % Chg Episode Segments Played Online (P2+) * 11.7 Million 7.3 Million +59% Ads Served (P2+) * 50.6 Million 8.1 Million +525% * Weekly Average Source: Ads Served DART 9/24-11/4/10 vs 9/25-11/5/09; Episodes segments played online 2009 9/4-11/5/09- Move Networks: 2010 9/24-11/4/10 Digital Smiths. *10/1-11/30/09 109
A New Broadcast Network Television Model? Increased ad loads in full episodes from 5 to 12 Ad completion rates during full episodes are over 90% Full episode ad completion rates are up over year ago despite increased ad load Source: CBS Interactive 110
A New Broadcast Network Television Model? 600,000 500,000 400,000 Total Video Streams (000) +91% YoY 487M 396M 300,000 255M 200,000 100,000 154M +157% YoY 0 Oct 2009 Nov 2009 Dec 2009 Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Oct 2010 CBS Interactive CBS.COM Source: comscore VideoMetrix Aug 2009- Oct 2010 111
A New Broadcast Network Television Model? 80.0 70.0 60.0 50.0 Minutes Per Viewer +151% YoY 67.5 52.1 40.0 30.0 20.0 10.0 25.2 20.7 +168% YoY 0.0 Oct 2009 Nov 2009 Dec 2009 Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Oct 2010 CBS Interactive CBS.COM Source: comscore VideoMetrix Aug 2009- Oct 2010 112
Video Streaming After you have watched a program on the internet, how would you say it has affected your viewing of that program on TV TV Watching: 2006 2007 2008 2009 Increased 16% 27% 23% 29% Decreased 9% 7% 13% 9% Remained the Same 75% 66% 64% 62% Source: CBS Television City New Technology Focus Groups, December each year 113
New Distribution Options 114
Advantage of New Distribution Options Dynamic Ad Insertion Addressability Targeting 115
New Distribution Options 116
Advantage of New Distribution Options Theoretical A La Carte Distribution Alternatives 117
Theoretical A La Carte Distribution Alternatives All networks available on demand on any device All networks, broadcast and cable, priced at the same price Respondent chooses the networks they would purchase Total price of networks selected is compared to the respondent s s current cable bill Respondent then chooses between new, theoretical a la carte package and current cable package. Experiment is run at several different prices Last time fielded: December 2009 Source: CBS Entertainment Panel Survey, July 2010 118
Theoretical A La Carte Distribution Alternatives At highest price tested demand for most networks, broadcast and cable, was inelastic Average price a la carte package chosen was 17% less than current cable package Just under half of respondents (49%) said that they would select the new a la carte package over their current cable package If this happened, it would result in a decline of 16% in subscription revenues Source: CBS Entertainment Panel Survey, July 2010 119
Theoretical A La Carte Distribution Alternatives Approximately 70% of the respondents included each of the broadcast networks in their a la carte package That would mean that 19.2% of the subscription fees would go to the broadcast networks Source: CBS Entertainment Panel Survey, July 2010 120
Total Television Subscription Revenues from Switchers $24 Billion $4.6 Billion Total TV Subscription Revenue Broadcast Share 121
Total Television Subscription Revenues $56 Billion $4.6 Billion????????? Total TV Subscription Revenue Broadcast Share Broadcast Retransmission Fees 122
Advantage of New Distribution Options The Viewers Choose 123
Programs A New Distribution System Must Have Average Must Haves = 12 Shows Top 50 = 67% of Mentions Top 100 = 91% of Mentions Broadcast Network Programs 88% of Top 50 Mentions 79% of Top 100 Mentions CBS = 31% of Mentions (23 different shows) Source: CBS Entertainment Panel Survey, July 2010 124
New Distribution Options 125
Food For Thought 126
Coverage Engagement Equals Critical Mass 127
Uniques - Facebook October 2010 300,000,000 Unique Visitors/Viewers 250,000,000 200,000,000 150,000,000 151,000,000 100,000,000 50,000,000 0 Facebook Source: Facebook: comscore, October 2010; Unique Visitors times; CBS: Nielsen, NPower, October 2010, CBS Affiliate Total Day Cume Audience Persons 2+ 128
Time Spent Facebook October 2010 300,000,000,000 Total Time Spent in Minutes Per Month 250,000,000,000 200,000,000,000 150,000,000,000 100,000,000,000 50,000,000,000 42,582,000,000 0 Facebook Source: Facebook: comscore, October 2010; Unique Visitors times average minutes spent; CBS: Nielsen, NPower, October 2010, CBS Affiliate Total Day Cume Audience times average minutes viewed 129
Uniques/Reach - Facebook October 2010 Facebook vs. CBS Television 300,000,000 250,000,000 Unique Visitors/Viewers +159% 239,886,000 200,000,000 150,000,000 151,000,000 100,000,000 50,000,000 0 Facebook CBS Source: Facebook: comscore, October 2010; Unique Visitors times; CBS: Nielsen, NPower, October 2010, CBS Affiliate Total Day Cume Audience Persons 2+ 130
Time Spent - Facebook October 2010 Facebook vs. CBS Television 300,000,000,000 250,000,000,000 200,000,000,000 Total Time Spent in Minutes Per Month +394% 210,349,550,000 150,000,000,000 100,000,000,000 50,000,000,000 42,582,000,000 0 Facebook CBS Source: Facebook: comscore, October 2010; Unique Visitors times average minutes spent; CBS: Nielsen, NPower, October 2010, CBS Affiliate Total Day Cume Audience times average minutes viewed 131
Thank You 132