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CBS and Comcast strike a deal

Marketplace Staff Aug 3, 2010

CBS and Comcast strike a deal

Marketplace Staff Aug 3, 2010


Steve Chiotakis: Comcast has signed a deal with CBS to continue providing programming for the next 10 years. As part of the deal, Comcast will be able to expand its on-demand access to the company’s shows. The agreement covers CBS TV, Showtime Networks and the CBS College Sports channel.

Brad Adgate is senior vice president of research with Horizon Media. He’s with us live from New York right now. Good morning.

Brian Adgate: Hey, good morning Steve.

Chiotakis: Alright, so it’s odd that we’re hearing about a 10-year deal. That’s a long time. Why did they go that long?

Adgate: Well, I think part of it is just to… Comcast is being looked at the FCC. They want to acquire NBC, a big rival of CBS, and I think there’s some concerns about how big can Comcast get, and I think this is the way to show the FCC and competitors that they’re willing to play ball.

Chiotakis: They’re willing to play ball, and you mentioned the Comcast acquisition of NBC, where there any implications alongside that?

Adgate: I think so. I think they’re getting some concerns about how big is big. It’s a huge deal, and certainly it involves a lot of the stations and the network and studios and cable networks — these go head-to-head with CBS, so it’s not like they’re going to be the 800-pound mammoth that’s going to control the marketplace. They’re going to negotiate with their competitors.

Chiotakis: And what do they stand to gain from CBS?

Adgate: Well, I think, again, they stand to gain from CBS. It’s the most watched network, they have a lot of premiere sporting events — including the Super Bowl and March Madness — and I think that CBS gets some sort of 10-year commitment, they get some sort of 23 million subscribers, so they gain from that as well. Also, CBS is almost exclusively dependent on ad revenue, so this kind of gives a second revenue stream that will enable to just soften the blow when the economy goes slow.

Chiotakis: Very quickly, Brad. I know ABC and Time Warner are in the depths of negotiations, as well. Are we going to see something similar there?

Adgate: I think so. I think the marketplace has been set. You know, comcast has 22 million subs, CBS is the largest network. I think that this is the bar. I’d be very surprised if the ABC-Time Warner, even thought it’s in the 11th hour, won’t come to some sort of agreement.

Chiotakis: Brad Adgate with Horizon Media in New York. Brad thanks.

Adgate: Thank you Steve.

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