LIVE CBS CEO Leslie Moonves At Goldman Sachs

The always-optimistic Les Moonves takes the stage. We'll see what picture he paints of the ad market and the company's prospects in digital.

Les: "We're a company in transition." Since the split with Viacom, CBS has spent $2.6 billion on acquisitions (including CNET) and $2.3 billion on divestitures, including theme parks and radio.

We still love the network TV business. People were surprised how big the Olympics were for NBC. It was the first time I've ever rooted for NBC. The CW Gossip Girl premiere did well. Fox's premieres doing well. We're optimistic for our fall show premieres next week.

CBS Interactive properties will have $650 million in revenue this year, including CNET. Very little of that money is taken away from us elsewhere. Not from network, not from TV stations, not from radio. If there is any cannibalization, it is coming from print.

Question: how is the Internet changing the international marketplace for TV?
Well, we're putting shows on the air abroad faster, right after the US airing. There is a shifting tide out there about how people are consuming our content. As time moves on people want what they want where they want and however they can get it. We are trying to find the revenue streams.

Ten years ago we sold CSI in one place--network TV. Now we sell it in dozens of places. Without the CNET buy it would have taken us 10 years to get where we are today.

The network is still the number one source of revenue and second is syndication. We are not looking for the internet to drive our profits. It is ancillary to network TV. Not the rerun of CSI--but fan sites, related properties.

Are your upfront committments holding? Are the dollars going to arrive?
The upfront was surprisingly strong. The good news--how well will it hold up? Advertisers have the ability to cancel after the Olympics, but it has remained consistent with the last 5-10 years. It has been holding up. The scatter market is remaining strong. We are encouraged by it.

Is weakness spreading from autos and weak categories to others?
Bank of America is a very big advertiser. Merrill wasn't. Automotive is very big category for us. In LA its our number one category (autos). I don't feel the Internet is taking from local dealerships--it's what's happening in the auto industry.

We've kept our costs (at the network) level over the past few years. CPMs go up so the economics of the network business are getting better. This year costs are up (from the strike year) but we have more product. This is the first full year of the new ratings system (which gives credit for 3 days of DVR viewing) -- it will prove to be more effective. We only did 17 original CSIs last year vs the 24 we would normally do.

We can't wait for the PPM (personal people meter) in radio. It's an accurate measurement. the fact that radio ratings are still based on written diaries ... with the PPM the numbers are astonishingly higher. Especially radio stations in big markets. Our NYC stations will be up 20% with PPMs.

On the strike:
We hit the ground running post-strike. We had a relatively normal pilot season. ABC did it later than we did. I don't know how much product NBC has ready. We have more comedies than anyone else. New comedy on Monday night, "My Worst Week." I think we have great opportunities. Five new shows is the perfect mix, three dramas and two comedies.

What will be the impact of HD on sports?
I think HD has really helped. The interesting statistic is that TiVo has helped. DVR penetration is north of 30%. The people who use it are watching the top network TV shows. They aren't recording cable. The most loyal viewer only watches 2 out of 4 episodes. With DVRs, they are watching more. We think its a net positive. As long as we have a bigger share of top-20 programming than anyone, it is a positive for us.

85% of viewing happens in the first 24 hours on DVRs. The highest rated show on Thursday are two shows that go against each other: CSI vs Grey's Anatomy. People use DVRs to watch both.

On retransmission fees:
We have concluded 25 small MSO deals. Now in talks with Cablevision and DirecTV. We like that we have great programming in January and February and they will want that programming on their system. Productive that no one has threatened to pull off our signal. That means the talks are going well and everyone will win.

Will you bid for the Olympics?
It's a great event, but expensive. It depends on the economics of it. NBC says they made a lot of money on the Olympics. I think they did a great job. They used their cable nets very effectively. We will look at it. We looked at it when London came up. Some sports rights just don't make any sense. Our SEC deal is profitable in the first year.

On interent advertising: we made a lot of money on March Madness On Demand. That has to do with msot people don't hav a TV set at work or don't have the game in their market. On Saturday afternoon I dont know how many are streaming it who arent watching it on their HD television set.

CNET integration:
Going well. The amount of traffic has grown tremendously. It is on the Early Show once a day. Traffic has gone up and sales is beginning to match it. We are anticipating great success.

How do you monetize online video?
Having a sales manager responsible. CNET was in better shape technologically than CBS. That has helped. Through integration of sales and marketing... they do have the power of the network sales team (CNET). Our network sales group can make a big sale to GM and are able to give them interactive as part of the deal.

Billboards:
Digital rollout is small. 4k digital screens out of 250k screens. We get them out wherever we can. Revenue is 3-4x a regular billboard. There is capex to it and you have to be careful about where you put it. Certain markets it just won't work in.

How does it affect CBS in the syndie market now that cable is producing so many original shows?
We produce for A&E and NBC. Are they competitive with us? Yes and no. I don't think they have the budgets to produce 22 hours like we do. They get a lot of Emmys but don't have the big audiences we have.

Our DVD sales have been terrific. Paramount distributes for us and do a great job. DVD market in TV seems stronger than in film. Blu-ray is going to be good for us. Bulk of money comes from the new releases of CSI. But believe it or not there is still a lot of money left in Charmed from DVD sales.

Update on radio station sales?
We have sent out 40 books. Conversations will begin at end of the month. We dont know how the market will be. We don't have to sell. If we don't get the right price we will pull back until we get better prices.

Political is very strong. There is a lot of money being raised. Very interesting candidates. We anticipate $150m at our TV stations (of political). It's more a Q4 event than a Q3 event. And its obviously in key markets like PA. Calif a lot of issue money. Florida important. Detroit important. We hope candidates raise a lot of money.

We think we are vastly undervalued. We think we are positioned for when the markets turn around and we are a very underestimated company.