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What Does CBS Plan To Do With Channel Ten?

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CBS was described as ‘keeping its cards very close to its chest’ throughout the bidding process for Channel Ten, and has largely declined media requests to comment following creditors’ approval of its acquisition offer – the question then remains, what does the American broadcaster plan to do with a network it never intended to own?

The move follows reports which state CBS endeavours to pursue significant global expansion within the online video streaming space.

Reports state CBS is attempting to transition away from broadcast TV, in favour of internet-based offerings. For a company which originated as a radio organisation, it has since successfully morphed into a TV giant. Therefore, the company has strong precedent for moving away from fading mediums, toward new ones.

However, like Channel Ten and American-based broadcast rivals, CBS has been hurt by shifting consumer behaviour which sees a transition away from TV towards on-demand online streaming services.

Implying it is a progressive organisation, reports state CBS has decided to embrace this transition than fight it.

As a claim to support this, in 2014 the company was the first American network to launch its own US-based online streaming service. Whilst the company faced some ridicule for the decision initially, reports state it is now doing quite well.

CBS Chief Executive, Les Moonves, revealed its streaming service (‘CBS All Access’) coupled with its Showtime streaming product had successfully amassed 4 million subscribers.

As such, the company is on track to reach its goal of 8 million subscribers by 2020. The streaming platform’s growth has been said to increase influence with advertisers.

The cumulation of the reasons above has led analysts, such as Macquarie’s New York-based Tim Nollen, to herald CBS “the best placed [American] TV network group”, stating its streaming products have allowed it to “stand apart from much of the cord-cutting fears”.

Recognising that online-based subscriber products work best globally, than locally  (e.g. Netflix) reports state CBS plans to expand its All Access streaming service into Australia, followed by Canada.

Speaking of this Mr Moonves states:

“All Access is not going to get 50 million [subscribers], but there are people out there who clearly want this service”

“We’ve proven we can do it domestically, and we will do it internationally. We are very aware of the international success that other streaming companies have had. We now see a huge opportunity for CBS to go direct to the consumer on a much bigger scale worldwide”.

A potential roadblock for CBS’ pursual of this strategy, stems from the long-term agreements it has in place for licensing its content overseas – e.g. with Australia, all of Showtime’s content and some CBS content has been licensed to Stan (a joint venture between Fairfax and Nine). Naturally, over time these agreements will need to be amended.

Witnessing CBS compete in the Australian landscape is set to be an interesting affair, especially as this is a company well versed in competing with rivals such as the Fox/News Corp conglomerate.

It’s likely CBS’ acquisition of Ten may lead to a heightened rivalry with the Murdoch family. It follows remarks made by CBS’ Moonves at an American conference last week:

“I also heard him [Murdoch] say that the network was not a core asset. We make a lot of money. I guess maybe they do not”.

As a matter of context, the deal is considered a relatively ‘small’ acquisition, for a company which generated US$13 billion in revenue last year.

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