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 the rising costs of programming. Earlier this year, News Corp.'s Fox and Time Warner Cable had a contentious negotiation over a distribution agreement for Fox's television stations. In March, Walt Disney Co. pulled the signal of ABC from Cablevision Systems Corp. in New York in a dispute over fees that was ultimately resolved.
Besides distribution of CBS' television stations, Comcast has also agreed to expand distribution of CBS 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. CBS has often been seen as being too dependent on advertising by Wall Street, and Chief Executive Leslie Moonves has been aggressively 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 in excess 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 past Washington lawmakers. Media watchdogs and rival companies have expressed concern about combining Comcast, which has almost 25 million cable subscribers and is 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 Disney, which owns ABC, ESPN and other cable channels, and Time Warner Cable. Their current deal expires next month.