CBS and Comcast cut 10-year distribution deal

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CBS Corp. has struck a 10-year agreement for distribution of its broadcast network and pay television channels with Comcast Corp., the nation’s largest cable and broadband provider.

The deal comes at a time when relationships between programmers and distributors have become very tense. Cable and satellite companies have been concerned about rising costs of programming. Earlier this year, Fox and Time Warner Cable had a very contentious negotiation over a distribution agreement for Fox’s television stations. Last spring, Walt Disney Co. pulled the signal of ABC from Cablevision Systems Corp. in a dispute over fees that was ultimately resolved.
Besides distribution of CBS’s television stations, Comcast has also agreed to expand distribution of CBS’s cable channels Showtime, College Sports Network and the Smithsonian Network. Comcast will also have rights to CBS content for its online platforms.

For CBS, the deal helps it further establish a second revenue stream. Wall Street has often seen CBS as being too dependent on advertising. Chief executive Leslie Moonves has been aggressive in trying to develop a strong subscription business for the company.

‘This is a secure revenue stream,’ Moonves said in an interview, adding that it will help CBS weather the cyclical nature of the advertising business. Terms of the deal were not disclosed, but Moonves has said previously that he expects CBS to be able to generate north of $250 million annually in distribution fees from cable and satellite operators in the next few years.

For Comcast, cutting a deal with CBS comes when the company is in the midst of trying to get its proposed merger with NBC Universal through Washington lawmakers. Media watchdogs and rival companies have expressed concern that the combination of Comcast, which has almost 25 million cable subscribers and the nation’s biggest broadband provider, with NBC Universal, parent of NBC, Universal Pictures and cable channels CNBC, USA, Bravo and MSNBC.

Over the last several weeks, Comcast has struck a number of agreements that it hopes will ease the concerns of lawmakers. However, last week Dish Network, a satellite broadcaster that competes with Comcast, blasted the cable company. The two have been battling over a Philadelphia sports cable channel that Comcast owns and Dish wants to distribute.

CBS has now secured distribution deals with most of the nation’s biggest pay TV companies including Time Warner Cable and Cablevision. The next big battle between a programmer and distributor over programming costs is expected to be between Walt Disney Co., which owns ABC, ESPN and other cable channels and Time Warner Cable. Their current deal expires next month.

-- Joe Flint

CBS CEO Leslie Moonves. Credit: Nicholas Roberts/AFP/Getty Images.