Focus on original programming
Media companies have started focusing on producing original programming. CBS (CBS) is also increasingly concentrating on original programming. When it comes to primetime programming, the company is set to launch 16 pilots this year, of which it owns 15 pilots. CBS will own around 80% of its programming that it will broadcast next year.
The company also stated on its fiscal 1Q16 earnings call that, out of these 16 pilots, eight pilots will be produced by CBS while seven pilots will be co-produced by CBS along with The Walt Disney Company’s (DIS) ABC, Comcast’s (CMCSA) NBC, and Time Warner’s (TWX) Warner Bros.
CBS also stated on its fiscal 1Q16 earnings call that its programming costs will be higher this year than next year. CBS also said that programming costs for CBS Showtime are not expected to affect Showtime’s operating margin. The company intends to maintain the operating margin for Showtime in the “mid-40%s”.
Original programming strategies among peers
Time Warner stated at a Deutsche Bank (DB) investment conference earlier this year that it expects to double its original programming budget from $500 million to $1 billion by 2018, specifically for Turner’s TBS and TNT.
Comcast had also stated at the Guggenheim Securities TMT Symposium in New York that it would like to produce around 80% of the programming on its channels. Comcast further stated that, considering that viewers are increasingly opting to watch content over SVOD (subscription video on demand) services like Netflix (NFLX), original programming is the way to go for media companies.