CBS Corp. licenses older shows to Amazon.com
The move, announced Wednesday, represents the online retail giant's most significant licensing agreement since launching its Amazon Prime subscription service in February to compete with Netflix.
Seattle-based Amazon is eager to become a bigger player in the online programming space, and is seen as a possible buyer of the popular video site Hulu, which is on the block.
Financial terms and the length of the Amazon-CBS deal were not disclosed, and the arrangement is nonexclusive.
Marci Ryvicker, a media analyst with Wells Fargo Securities, calculated that the Amazon deal would bring CBS more than $100 million in revenue over the term of the agreement.
CBS has firmly held on to the rights of its current series, so episodes of "NCIS," and "Hawaii Five-0" are not part of the arrangement. Earlier this year, CBS negotiated a similar licensing deal with Netflix. This allows Amazon to offer some of the same shows that Netflix currently provides.
"We believe that this agreement is structured slightly differently than the Netflix deal," Ryvicker wrote in a report Wednesday morning. "It is a smaller percent of CBS' library; is shorter term (we believe 18 months versus 24 months) and likely has some sort of per-subscriber structure in addition to an upfront payment."
"These differences make a lot of sense to us given that Amazon is still in a ''build-out'' phase when it comes to its streaming TV offering," Ryvicker said.
Beginning next month, customers who subscribe to the Amazon Prime streaming service will have access to episodes of 18 TV series owned by CBS -- including Showtime's "The Tudors," and the complete "Star Trek" franchise. Customers pay a flat $79 a year for Amazon's streaming video service, a price that also includes free two-day shipping for many products bought on the site.
With the deal, Amazon will have more than 8,000 movies and television episodes on its Prime service. That's still significantly less than the estimated 20,000-plus available from Netflix, which doesn't disclose the exact number.
Later this summer, dozens of CBS shows also will be made available to Amazon's Instant Video offering, in which viewers can pay a fee of about $1.99 to order a stream of a single episode.
"We're excited to add thousands of popular CBS programs to our already great selection, all of which stream at no additional cost to Amazon Prime members," Jeff Bezos, Amazon.com chief executive, said in a statement.
CBS Corp. Chief Executive Leslie Moonves added, "This new agreement represents another meaningful way for us to realize incremental value for CBS' content."
Analyst Ryvicker concluded: "We believe that in both deals, the economics are very favorable for both CBS and its [online video distribution] partners."
-- Meg James and Ben Fritz
Photo: Kelsey Grammer in "Frasier." The CBS-owned television show along with several other CBS TV series will be available to Amazon Prime streaming customers next month. Credit: Gale Adler / Paramount Pictures