CBS outlines post-CEO production deal with Leslie Moonves

CBS Chief Executive Leslie Moonves has nearly three years remaining on his employment contract, and after that, he will be entitled to a lucrative CBS-financed television and movie production deal.

CBS and Moonves this week signed an agreement that sketches out Moonves' tentative producer agreement, according to a filing Friday with the Securities and Exchange Commission. 

The proposed arrangement borrows from a particularly rich production deal that former News Corp. President Peter Chernin exercised when he left the executive suite of Fox in 2009. Last week, private equity firm Providence Equity Partners invested $200 million in Chernin's company -- demonstrating the potential value of a company headed by one of the biggest names in the entertainment business.

But, unlike Chernin, Moonves may choose not to trade in his executive stripes to run a production company. The filing did not rule out the possibility that Moonves, 62, could extend his employment agreement with CBS, keeping him at the CEO controls beyond the current February 2015 expiration of his contract.

Last year, Moonves received compensation of $69.9 million for his CEO role, making him the highest-compensated executive in Hollywood.

Under the proposed contract, Moonves could trigger the production deal once he steps down. CBS would be required to finance the enterprise for at least four years and invest as much as $3 million a year to cover the operation's overhead for staffing and a development fund to buy projects.

CBS would be obligated to buy at least three TV series projects over the life of the deal. CBS would have to pay Moonves license fees for TV shows equal to the highest amount paid to other producers who do business with the network or with CBS Studios.

CBS also would be required to pay Moonves a guaranteed fee of $1.5 million a year.

"This fixed fee is offset and reduced dollar for dollar by all executive producing fees earned for shows ordered from Mr. Moonves," the agreement states. "Mr. Moonves will earn fees for each hour and half hour scripted series and for each alternative series that are accepted by CBS, subject to pre-defined terms and at rates generally consistent with those paid to other top producers with Mr. Moonves’ skill, experience and record of success."

CBS would also be required to pay Moonves a "penalty fee" if the network failed to order the agreed-upon number of TV shows.  Chernin's agreement with Fox contains a similar provision. 

Under the terms of the deal, CBS has a first look at all of his movie projects. If CBS gave its blessing to a movie, Moonves would receive a producer fee, plus "certain contingent compensation if, and only if, the film achieves profitability." He would be entitled to the same profit-sharing agreements that the company's current CBS Films extends to other producers.

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Photo: Leslie Moonves, right, president and chief executive of CBS Corp. at the National Assn. of Broadcasters convention in 2011. Credit: Julie Jacobson / Associated Press

Sumner Redstone at Global Conference: "Take risks"

Sumner Redstone has a regret.

His father, Michael “Mickey” Redstone, didn’t live to see his son’s unqualified success in the business world. Sumner Redstone -- who controls two of the world’s preeminent media companies, Viacom Inc. and CBS Corp. -- has memories of his father that were etched during the Depression when the family lived in a West Boston tenement. 

 “I can remember him carrying rolls of linoleum on his back,” Redstone said Wednesday during an appearance at the Milken Institute Global Conference in Beverly Hills.  “He believed in hard work.  He had to work hard, and I had to work hard.” 

The title of the Global Conference session was “What it Means to be an Entrepreneur: A conversation with Sumner Redstone.” Redstone was interviewed by Michael Milken, and the two men hadn’t gotten too far into their dialogue when Redstone groused that more than a quarter of a century ago, Milken charged him “an extra quarter-percent interest” on a loan that Redstone took out to begin building his empire.  

Redstone still seemed peeved. “I’ve been paying for it ever since,” Milken lamented.

The legacy of Redstone -- who is three weeks shy of his 89th birthday --- has been written by many, including by Redstone himself. And, on Wednesday, Redstone told his story again to a standing room crowd in a small conference room at the Beverly Hilton. 

The secret to success, the mogul said, was: “You have to be in control of your destiny.  You can’t work for anyone else.  It’s not about money, it’s about winning.  You have to have a passion to win.”  (That’s also the title of Redstone’s 2001 autobiography.)

“I’ve taken some perilous risks. But I never took them unless I was confident that the rewards far outweighed the risk,” Redstone said.   

Perhaps his biggest risk was the hostile corporate take-over, in 1987, of Viacom Inc., then a cable television company with some puny channels named MTV and Nickelodeon.  Investment bankers wanted Redstone to sell the channels to pay down debt. Redstone refused.

Now MTV and Nickelodeon are Viacom's financial engines.

“My father, he always thought I was taking too big of a risk on Viacom.  He said, 'You’re betting your life on Viacom.'  I told him that I wanted to,” Redstone told the group.  “Unfortunately, he never lived to see the success of Viacom.”

Viacom now is valued at $27 billion. (CBS, Redstone's other company, has a $22-billion market cap.)

“I saw that content was king; I coined that phrase decades ago,” Redstone told Milken and the group, which included CBS Chief Executive Leslie Moonves; Mel Karmazin, chief executive of Sirius XM Radio Inc. and former chief operating officer of Viacom; CBS board member Arnold Kopelson; movie producer Robert Evans; music producer Quincy Jones; and former CBS personality Mary Hart. 

Milken asked Redstone how he judged talent in the executive suite, although Milken didn’t mention the gallery of executives that Redstone, over the years, booted to the curb (including Karmazin in 2004). 

Milken did mention one piece of talent.  Tom Cruise, one of the most bankable stars ever for Viacom’s movie studio, Paramount Pictures, was dismissed by Redstone in 2006.  “His behavior was terrible; he was jumping on couches,” Redstone said. “Women hated him, a lot of people said they would never come to see another one of his movies. And he made $10 million on the Paramount lot for doing nothing!”

But a few years later, Redstone said, Cruise told him that he wanted to make pictures for Paramount again. Redstone said he said yes, but also told Cruise, “You won’t get the same deal.”

“Today he’s one of my best friends,” Redstone said. “I’ve been for dinner to the house that he shares with his wife, Katie. And today, 'Mission Impossible' is grossing more than any other 'Mission Impossible' before it.  It's on track to gross $700 million. People came back to the movies to see him.” 

These days, Redstone has trouble getting around so he doesn't get out as much as he used to.  But he said he watches a lot of golf on TV (“Tiger [Woods] will never make it again. He’s done,” Redstone predicted).  Redstone also oversees his tanks full of exotic fish in his Beverly Park home.  

“When you look at the fish, you relax.  When you look at the fish, your blood pressure goes down,” Redstone said, adding that despite being worth nearly $4.5 billion, he still has stress in his life.

Milken and Redstone often discuss healthy diets, Milken said. 

“I eat and drink every antioxidant known to man, and I also drink red wine every night," Redstone said "It, fortunately, prevents aging so it is of particular interest to me.”

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Photo: Sumner Redstone poses with his Hollywood Walk of Fame star. Credit: Paul Buck / EPA

 

 

CBS will break financial records in 2012, Leslie Moonves predicts

CBS Corp. might be a titan of old media, but its first-quarter earnings were boosted by gains in new media: the digital distribution of its television programming and the sale of e-books.

"The growth in digital is a positive development for us," CBS Chief Executive Leslie Moonves told Wall Street analysts in a conference call Tuesday to discuss earnings. "We are extremely pleased with our first quarter. We broke records in five key financial metrics for the quarter, and I’m confident we will break records for the year as well."

The New York-based broadcasting company beat analysts' estimates by reporting 80% higher net earnings. The company earned $363 million, or 54 cents per diluted share, up from $202 million, or 29 cents per diluted share, compared to the year-earlier period. The substantially higher margin came from growth in operating income as well as lower weighted average shares as a result of the company's stock repurchase program.

For the quarter ended March 31, CBS collected revenue of $3.92 billion, an increase of 12% from the first quarter of 2011.

CBS attributed the increase to content licensing, particularly its online distribution deals with Netflix and Amazon.com, and higher fees paid by cable and satellite TV operators for the retransmission of CBS' broadcast signal. Content licensing and distribution revenue soared 39%.

"There are a lot of players out there circling the building," Moonves said. "They need our content.  It's an exciting period of time."

Advertising revenue, company wide, was up 5%. At its flagship CBS broadcast network, ad sales were up 8%. The network, according to Moonves, is expected to end the TV broadcast season with ratings gains in key demographic groups: total viewers, viewers age 18 to 49 and viewers age 25 to 54.

CBS reports 12% higher revenue in first quarter

 
CBS Corp. reported solid earnings Tuesday on higher revenue and advertising sales.

The New York-based broadcasting company reported net earnings of $363 million, or 54 cents per diluted share, up from $202 million, or 29 cents per diluted share, over the year earlier period. The higher margin came from growth in operating income as well as lower weighted average shares as a result of the company's stock repurchase program.

For the quarter ended March 31, the broadcasting company reported revenue of $3.92 billion, an increase of 12% from the first quarter of 2011. CBS attributed the increase to content licensing and higher distribution fees. Advertising revenue was up 5%.

Investors have been expecting CBS to post a strong year -- lifted by hundreds of millions of dollars in political spending expected to flood its TV stations and fees paid by cable and satellite providers for the retransmission of CBS' broadcast signal. The company also is collecting millions in fees paid by online distributors, including Netflix.

CBS shares closed Tuesday at $33.42, up 4 cents.  The shares are trading 33% higher than last year at this time.

CBS owns its flagship CBS television network, which broadcasts such shows as "NCIS," "Survivor" and "Two and a Half Men," television and radio stations, a billboard unit, premium cable channel Showtime, and the Simon & Schuster publishing house.

CBS is expected to discuss its results in an earnings call with analysts later this afternoon.

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Photo: CBS corporate logo.  Credit: CBS Corp.

Wolfgang Hammer, Terry Press named to head CBS Films

Veteran marketing maven Terry Press and young business executive Wolfgang Hammer have been named co-presidents of CBS Films, the movie company owned by television giant CBS Corp.

Hammer has been chief operating officer of CBS Films since December 2010, while Press has overseen marketing as a consultant since 2010.

The dual promotions represent a strong vote of confidence by CBS Corp. Chief Executive Les Moonves in a pair of executives who have never before held the top job at a studio. He is said by people familiar with the matter to have become a big fan of both Hammer and Press in the last year.

The position has been open since October, when former president Amy Baer was pushed out following a string of flops. Moonves has since then been trying to determine the leadership of the division while reshaping it from a studio focused on producing mid-budget dramas to one that acquires films at festivals and produces director-driven genre films.

Press, 52, has for the last several years been a consultant who, in addition to CBS' releases, has worked on Lionsgate's recent mega-hit "The Hunger Games" and the 2010 Oscar winner "The Social Network." She previously oversaw marketing at DreamWorks and at Walt Disney Studios.

Press' purview has never before extended beyond advertising movies. In her new job, it will extend to the creative side, including development and production, as well as distribution.

Hammer, 34, has had a meteoric rise in his short Hollywood career. After serving for just two years as a vice president of production at Lionsgate, he was a surprise pick in 2010 to be CBS Films' new chief operating officer. He is known as a savvy negotiator and will oversee business, finance and legal affairs as well as acquisitions.

Over the last year, CBS Films has essentially been resetting itself with a new strategy. Following last March's modest performer "Beastly," the unit didn't release any movies until February, when its horror acquisition, "The Woman in Black," starring Daniel Radcliffe, was a surprise hit. Last month, it released the romantic drama "Salmon Fishing in the Yemen" in a limited number of theaters, to fine results.

Its next release is scheduled to be the airplane-set thriller "7500" from "The Grudge" director Takashi Shimizu, in August.

"In Terry and Wolfgang, we are fortunate to have two very skilled executives, each with terrific knowledge of the business and strong resumes of innovation," Moonves said in a statement. "They both possess the 'roll up your sleeves' attitude for making, acquiring and marketing quality films for a division that is small in size but laser-focused on assembling a mix of home-grown productions and acquisitions across a diverse range of genres."

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Top Comcast executives take a pay cut in 2011

Comcast Corp.’s highest-paid executives — Chief Executive Brian Roberts and NBCUniversal Chief Executive Steve Burke — experienced compensation deflation last year.

Roberts’ pay package shrank 13.3% in 2011 to $26.9 million. That included a performance-based cash bonus of $5.5 million for the 52-year-old executive.

Meanwhile, Burke’s compensation dropped a whopping 32% to $23.7 million, which included a performance bonus of $6.7 million. The 53-year-old executive’s amount fell dramatically in 2011 as it was the first time in three years that he did not collect a signing bonus.

Burke, who took over management of NBCUniversal last year when Comcast acquired controlling interest in the company, received bonuses of about $10 million in both 2009 and 2010 for extending his contract.

The compensation, disclosed Friday in a proxy filed with the Securities and Exchange Commission, put the managers of the Philadelphia-based cable and entertainment giant in the middle rungs of corporate pay across big media conglomerates.

By comparison, CBS Corp. Chief Executive Leslie Moonves received a package valued at $69.9 million last year, Discovery Communications Chief Executive David Zaslav received $52.4 million; Viacom Chief Executive Philippe Dauman captured $43 million, Walt Disney Co. Chief Executive Robert Iger collected $31.4 million, and Time Warner Inc. Chief Executive Jeffrey Bewkes got $25.9 million.

Three years ago, Comcast’s top executives agreed to a four-year freeze in their base salary. Roberts’ base salary was $2.8 million; Burke’s was $2.24 million.

The top Comcast executives could have received fatter packages last year. The company achieved substantial growth in revenue and free cash flow, but its top executives elected to bring their performance base bonus calculations more in line with how their underlings are paid — and the Comcast board's compensation committee agreed.

In its proxy, Comcast said its operating management’s “cash bonuses are based primarily on business unit operating metrics rather than consolidated financial performance.”

Chief Financial Officer Michael J. Angelakis last year received a total package of $21.9 million, which was a 4% decline from his 2010 compensation. In contrast, Executive Vice President David L. Cohen accepted more stock and other bonuses which boosted his take 19% to $15.1 million.

Comcast Cable Communications Chief Executive Neil Smit collected $18.5 million in 2011, including a $3-million cash performance bonus. This was the first time that Comcast was required to disclose Smit’s earnings. Smit joined Comcast two years ago but he did not become a top corporate officer until last year when he was named chief executive officer of Comcast Cable.

And Ralph J. Roberts, the 92-year-old co-founder of the cable company, collected his customary $1-a-year salary.

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Top photo: Comcast Chief Executive Brian Roberts in 2007. Credit: George Widman / Associated Press.  Bottom right: NBCUniversal Chief Executive Steve Burke in 2010. Credit: Nati Harnik / Associated Press.

CBS Chief Leslie Moonves collected nearly $70 million last year

"Two Broke Girls" and one rich CEO.

CBS Corp. Chief Executive Leslie Moonves catapulted to the top of the media pay ladder in 2011 with a compensation package valued at $69.9 million, according to documents filed Friday with the Securities and Exchange Commission.

The 62-year-old executive's package jumped about 21% over the $57.7 million that he reaped in 2010, which included a $27.5-million bonus.

“CBS significantly outpaced the industry in 2011 in terms of shareholder return," the media company said in a statement. "In fact, the company is the second best performing stock in the entire S&P 500 since March of 2009... The vast majority of this year’s pay is once again keyed to performance-based measures, closely aligning the overall value of the compensation with that of the company’s shareholders.”

CBS stock has been on a tear, soaring 42% last year. The stock closed Friday at $32.50 a share, an eye-popping increase over the $4 a share that it was trading for in 2009, following the market collapse. Investors have bid up the stock, in part, due to the anticipation that CBS will rake in hundreds of millions of dollars in political advertising dollars this year as candidates and political action committees try to influence the outcome of elections.

The company's assets include the CBS broadcast network, home to such hit shows as "Two Broke Girls," "NCIS" and "Survivor," local TV and radio stations and billboards. CBS also owns premium pay cable channel Showtime and Simon & Schuster publishing house.

Sumner Redstone, the executive chairman of CBS Corp., received compensation of $20.3 million in 2011. That means the 88-year-old mogul, who has been slowing down in recent years, collected more than $41 million in 2011 for his executive position at CBS Corp. and Viacom Inc. (Redstone received $21 million as executive chairman of Viacom).

Viacom Chief Executive Philippe Dauman made $43 million in 2011, considerably less than his 2010 package of $84.5 million.

Viacom and CBS traditionally lead the media pack because of the dual-stock structure of the two companies. Redstone controls nearly 80% of the voting stock, making it difficult for other shareholders to mount a successful protest over governance issues, including executive compensation.

Though not in the same stratosphere of Apple Inc.’s new chief executive, Tim Cook, whose compensation totaled $378 million in 2011, Moonves’ pay still is considerably higher than his peers in the media world. 

For example, Moonves received more than twice that of Walt Disney Co. Chief Executive Robert Iger, who collected $31.4 million in fiscal 2011, and nearly three times the amount of Time Warner Chief Executive Jeffrey Bewkes, who took in $25.9 million.  Both Disney and Time Warner are much larger than CBS.

News Corp.’s Chief Executive Rupert Murdoch raked in $33.3 million in 2011 running his global empire.  Discovery Communications Chief Executive David Zaslav collected a package valued at $52.4 million last year.

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Photo: CBS Chief Executive Leslie Moonves. Credit: Peter Foley / Bloomberg

CBS chief Leslie Moonves' favorite comedy is not on CBS

CBS Corp. Chief Executive Leslie Moonves made a startling admission at the 36th Annual UCLA Entertainment Symposium on Saturday.

At the end of a wide-ranging question-and-answer session, prominent entertainment attorney Ken Ziffren asked the television titan to name his favorite television comedy.

"Modern Family," Moonves said.  

The Emmy-winning sitcom, created by Steve Levitan and Christopher Lloyd, has become a colossal hit for ABC. The show, now television's top-rated comedy, is produced by another rival, 20th Century Fox Television -- not CBS'  production studio. 

It would hardly be news if any other entertainment CEO said he liked a competitor's program, but this was Moonves. He has been CBS' most ardent cheerleader for more than 15 years, and he has changed the names of several business units in his corporate stable so they would be branded CBS. 

Moonves immediately knew he would take flak.

"I'm going to get in big trouble with Chuck Lorre next week," Moonves said, referring to the prolific producer who has helped build CBS' comedy blocks into some of the most profitable half-hours in all of television with his shows "Two and a Half Men," "The Big Bang Theory" and most recently "Mike & Molly."

Ziffren noted that "Big Bang Theory" (produced by Warner Bros. Television), which airs on CBS on Thursday nights, is beating the once-invincible Fox Broadcasting singing competition "American Idol" in the ratings.

"Look, 'Idol' is still a monster show, I wish that I had it, but it's not what it used to be," Moonves said.

For the record, Moonves said his two favorite dramas on television were "The Good Wife" on CBS and "Homeland" on Showtime, which is owned by CBS. 

"And they are both mine," he said.

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Photo: CBS Chief Executive Leslie Moonves in April 2011 at the National Assn. of Broadcasters convention. Credit: Julie Jacobson / Associated Press

Sumner Redstone attends Viacom shareholders' meeting

Who is the man behind the curtain at Viacom? Sumner Redstone, of course.

After much speculation about the health of the company's 88-year-old chairman, Viacom Inc. opened its annual shareholders meeting Thursday morning in New York by dramatically parting a curtain for the big reveal: the ginger-haired Redstone on stage, sitting at a table along with two other senior Viacom executives — Chief Executive Philippe Dauman and General Counsel Michael Fricklas.

Last week, Redstone — who lives in Los Angeles — made headlines after deciding not to fly across the country to attend the annual session with shareholders in New York. A company spokesman initially said that Redstone — who controls nearly 80% of Viacom's voting shares — had an "unavoidable conflict" that would prevent his attendance. Media reports about Redstone's decision to skip the meeting prompted inquiries from shareholders, leading Redstone to make the trip after all.

"To paraphrase my very good friend Mark Twain, who couldn't be here with us today ... reports of my absence from this meeting have been greatly exaggerated," Redstone said to open the meeting, after the curtain parted, according to a Viacom executive in attendance.

Redstone in recent years has been cutting back on public appearances as his mobility has become an issue. The mogul, who will turn 89 this spring, attended last month's 84th Academy Awards ceremony in Hollywood, and plans to participate in the festivities on Hollywood Boulevard when he receives a star on the Hollywood Walk of Fame later this month.

He also kicks off every Viacom and CBS Corp. (which Redstone also controls) quarterly earnings call with Wall Street analysts, via speaker phone, by boasting about Viacom and CBS' sunny futures and how much he adores his two handpicked lieutenants, Viacom's Dauman and CBS Chief Executive Leslie Moonves.

About 30 investors attended Viacom's meeting Thursday, along with about 90 Viacom employees. Two investors asked questions. One shareholder wanted to know whether Viacom's Hollywood movie studio, Paramount Pictures, was still in business with Steven Spielberg. Viacom's Dauman said "yes," noting that the celebrated director was an executive producer of the "Transformers" movies.

Another shareholder, an older woman, said that she thought the actor Timothy Olyphant ("Justified") was "very hot" and that he should appear in Paramount's movies.  

Instead, Katy Perry will star this summer in a 3-D concert movie called "Katy Perry: Part of Me," Dauman announced at the meeting.

"Across our divisions, we strengthened our operational efficiency while continuing to invest in programming and films that resonate with audiences around the world," Dauman said. "On the eve of its 100th birthday, Paramount Pictures finished the 2011 calendar year as the No. 1 studio at the domestic box office. The studio captured the top spot thanks to an unprecedented run of highly successful films, including an industry-leading six consecutive films that earned $100 million or more in U.S. theaters."

At the end of the 45-minute meeting, the curtain closed, preventing spectators from witnessing Redstone's departure.

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Photo: Sumner Redstone, center, arrives at the 84th Academy Awards ceremony in Hollywood on Feb. 26. Credit:  Paul Buck / European Pressphoto Agency

Leslie Moonves says he's not proud of CBS Films' movies

No use putting lipstick on a stinker. 

Variety TV critic and columnist Brian Lowry tried Thursday to delicately question CBS Corp. Chief Executive Leslie Moonves about the dismal showing of CBS Films. The nascent unit has released such box-office bombs as the teen love story "Beastly," the Harrison Ford medical drama "Extraordinary Measures," and the Jennifer Lopez romantic comedy "The Back-Up Plan." 

Just last month, the president of the 4-year-old film unit, Amy Baer, left the company.  CBS Films — which hasn't released a movie since March — is now being run by a management team that features Chief Operating Officer Wolfgang Hammer and marketing consultant Terry Press.

"I think it would be fair to say that CBS Films has had kind of a rocky start," Lowry said during the question-and-answer session of the Hollywood Radio and Television Society luncheon in Beverly Hills.

"That's better than fair," cracked Moonves, whose push into the feature film business has been a major disappointment. Moonves had long wanted to get into movie production even when Wall Street considered it a bad idea. But Moonves persisted, rolling out a strategy to release only a small number of moderately budgeted movies a year.

Was it a miscalculation?

"I don't think it was the wrong strategy; it was the wrong films," Moonves said.  "Our corporation hasn't missed many. [CBS Films] is in the very early stages. We've only released five films and three of them have broken even. But they aren't movies that I'm proud of. I am proud of the content on CBS and I'm proud of the content on Showtime. I often say this, the TV business is a much better business than the movie business."

Predicated on what?, Lowry asked.

"Predicated on how well our TV divisions are doing, and how bad our movie business is," Moonves said to gales of laughter from the audience.  "It's pretty basic. I know there is a way we can do it better."

— Meg James

Photo: "Beastly" a teen angst movie starring Alex Pettyfer and Vanessa Hudgens / Credit:  CBS Films