WHEN: TODAY, THURSDAY, February 13, 2014
WHERE: CNBC'S "SQUAWK ON THE STREET"
Following is the unofficial transcript of a CNBC interview with CBS Corporation CEO Leslie Moonves on CNBC's "Squawk on the Street" today. Following are links to the interview: http://video.cnbc.com/gallery/?video=3000244707 and http://video.cnbc.com/gallery/?video=3000245904.
All references must be sourced to CNBC.
FABER: IT IS A DEAL TO COMBINE THE NATION'S TWO LARGEST CABLE COMPANIES, NBC UNIVERSAL PARENT COMPANY COMCAST AGREEING TO ACQUIRE TIME WARNER CABLE FOR ABOUT $45 BILLION IN AN ALL-STOCK TRANSACTION. BUT WHAT IS THE IMPACT GOING TO BE ON THOSE THAT CREATE THE CONTENT? LESLIE MOONVES IS THE CEO OF CBS CORPORATION WHICH, BY THE WAY, REPORTED VERY STRONG QUARTERLY RESULTS LAST NIGHT. SIGNIFICANT INCREASE IN THE COMPANY'S BUYBACK AND THE STOCK IS UP TODAY. LESLIE, GREAT TO HAVE YOU, AS ALWAYS, AND PARTICULARLY ON A MORNING WHERE WE HAVE SOME OTHER NEWS THAT I WANT TO HEAR FROM YOU ON.
MOONVES: WELL, DAVID, I CAME ON INITIALLY BASICALLY JUST TO TALK ABOUT OUR EARNINGS YESTERDAY, WHICH WE WERE VERY PROUD OF AND OBVIOUSLY WE JUST CONCLUDED A YEAR THAT WE HAD RECORD-BREAKING RESULTS IN EVERYTHING AND WHO WOULD HAVE KNOWN THAT IN THE MIDDLE OF THE NIGHT THIS DEAL TOOK PLACE AND IT'S WHAT EVERYBODY'S TALKING ABOUT TODAY SO --
FABER: IT IS. AND THAT'S KIND OF WHERE I'D LIKE TO START WITH YOU, NOT THAT WE WON'T GET, OF COURSE, TO THOSE EARNINGS AND A LOT OF OTHER ISSUES WE LIKE TO DISCUSS WHEN YOU JOIN US. BUT GIVE ME YOUR TAKE, OF COURSE, AS A COMPANY THAT CREATES ENORMOUS AMOUNTS OF CONTENT THAT HAS EXTENSIVE RETRANSMISSION FEES THAT CONTRIBUTE GREATLY TO YOUR BOTTOM LINE, WHAT DO YOU THINK ABOUT THE MARKET POWER OF COMCAST AND TIME WARNER CABLE TOGETHER?
MOONVES: FIRST OF ALL, I THINK EVERYBODY WAS PRETTY SURPRISED BY WHAT HAPPENED AND AS USUAL BRIAN AND NEIL DID THIS DEAL UNDER COVER, UNDER WRAPS. EVERYBODY THOUGHT THEY WERE IN SOCHI, AND HERE THEY WERE MAKING A HUGE DEAL WHILE THAT WAS HAPPENING. SO, I MUST SAY WE WERE ALL SURPRISED BECAUSE WE HEARD ALL THE NOISE ABOUT CHARTER TRYING TO ELECT THEIR OWN BOARD FOR TIME WARNER CABLE, AND AS THEY DID WITH NBC UNIVERSAL, I THINK COMCAST CAME ALONG AND MADE A PRETTY TERRIFIC DEAL FOR THEMSELVES. OBVIOUSLY AS A CONTENT PROVIDER, YOU KNOW, THE GOOD NEWS ABOUT COMCAST IS THEY OWN A NETWORK THAT COMPETES WITH US AND THEY OWN A NUMBER OF CABLE CHANNELS, SO THEY ARE A COMPANY THAT BELIEVES IN CONTENT AND THEY BELIEVE IN PAYING FAIRLY FOR CONTENT. AS YOU MAY HAVE HEARD, WE HAD A LITTLE DISPUTE WITH TIME WARNER CABLE THIS PAST SUMMER OVER WHAT THEY FELT THEY DIDN'T WANT TO PAY WHAT WE FELT WAS A FAIR SHARE FOR OUR CONTENT. COMCAST OBVIOUSLY THINKS ABOUT IT IN AN ENTIRELY DIFFERENT WAY. SO, LOOK, THE DEAL IS BRAND-NEW. WE JUST -- AS WE SAID WE JUST HEARD ABOUT IT LATE LAST NIGHT, SO WE'RE STILL LOOKING AT THE RAMIFICATIONS BUT WE HAVE A WONDERFUL RELATIONSHIP WITH ALL THE TERRIFIC PEOPLE AT COMCAST AND, YOU KNOW, IF THIS – IF THIS GOES THROUGH, WE LOOK FORWARD TO WORKING WITH THEM.
FABER: WELL, WHEN YOU SAY THEY THINK ABOUT IT IN A DIFFERENT WAY, I'M CURIOUS AS TO WHAT YOU MEANS. BY ALL ACCOUNTS, OF COURSE, LESLIE, CBS WON THE BATTLE WITH TIME WARNER CABLE, YOU CLEARLY, IT WOULD SEEM HAD THE POWER THERE. WILL YOU STILL HAVE THAT POWER TO DICTATE TERMS PERHAPS IF COMCAST IS A FAR LARGER COMPANY WITH 30 MILLION SUBSCRIBERS?
MOONVES: LOOK, AT THE END OF THE DAY, IF YOU HAVE THE RIGHT CONTENT, YOU'RE ALWAYS GOING TO HAVE THE POWER. AND HOPEFULLY, AS YOU REMEMBER WITH TIME WARNER CABLE, IT'S THE FIRST TIME WE'VE EVER GONE DARK WITH ANYBODY. IT'S NOT A QUESTION OF POWER. IT'S A QUESTION OF VALUE. AND AS I SAID, I THINK TIME – I THINK COMCAST APPRECIATES THE VALUE OF OUR CONTENT AND WILL PAY APPROPRIATELY FOR IT. THE POWER STRUGGLE THAT WE MAY HAVE HAD WITH TIME WARNER CABLE IT WAS ABOUT WHAT WE FELT WAS AN UNFAIR OFFER FOR OUR CONTENT. WE DON'T THINK IT'S GOING TO BE THE SAME SORT OF STRUGGLE. WE OBVIOUSLY ALREADY HAVE AN EXISTING DEAL WITH COMCAST.
FABER: OF COURSE.
MOONVES: AND WE LOOK FORWARD TO CONTINUING THAT IN THE FUTURE.
FABER: SO, I'M NOT HEARING YOU AT THIS POINT SAYING THAT YOU WILL OPPOSE THE DEAL EVEN THOUGH I WOULD THINK THAT YOU MIGHT BENEFIT EVEN IF YOU DID.
MOONVES: LOOK, AS I SAID, DAVID, IT'S REALLY TOO EARLY FOR ME TO COMMENT ON ALL THE RAMIFICATIONS OF THE DEAL. IT'S VERY EARLY. WE'RE LOOKING AT IT. WE'RE OBVIOUSLY TALKING ABOUT IT A GREAT DEAL, BUT IT'S WAY TOO EARLY TO DECIDE WHAT WE LIKE ABOUT IT OR WHAT WE DON'T LIKE ABOUT IT.
FABER: ALL RIGHT. WELL, LET'S TALK ABOUT SOME THINGS I THINK YOU DO LIKE WHICH WERE -- AND INVESTORS LIKE WHICH WERE EARNINGS FROM LAST EVENING. REVENUES FOR THE FOURTH QUARTER WERE UP 6%. CASH FLOW, I MEAN, BY EVERY MORE OR LESS METRIC THAT YOU WERE MEASURED, YOU WERE UP AND UP NICELY, INCLUDING BUYING BACK A LOT OF STOCK. LESLIE, YOU AND I HAVE TALKED IN THE PAST, OF COURSE, ABOUT THE POWER OF YOUR CONTENT AND ALL OF THESE DISTRIBUTION DEALS. I'VE SEEN THEM PILE UP OVER THE LAST FEW WEEKS WHETHER IT'S BLUE BLOODS OR WHETHER IT'S A HULU DEAL FOR YOUR LIBRARY. CAN YOU CONTINUE THAT KIND OF PACE OF MONETIZING YOUR CONTENT?
MOONVES: ABSOLUTELY. I MEAN, THE GREAT NEWS FOR US IS WE CONTINUE TO PRODUCE FIRST-RATE CONTENT, PREMIUM CONTENT. AND THERE ARE ALWAYS SEEM TO BE MORE AND MORE PEOPLE WHO WANT THEM, MORE AND MORE BUYERS. AS YOU MENTIONED, WE'VE RECENTLY SOLD "BLUE BLOODS" WE RECENTLY SOLD "ELEMENTARY" AND WE MADE DEALS WITH HULU PLUS ON A MAJOR BASIS. SO, THERE'S ANOTHER SVOD PLAYER BESIDES NETFLIX AND AMAZON PRIME, SO THE GREAT NEWS IS -- AND, YOU KNOW, WGN IS A NEW PLAYER IN THE MARKETPLACE AS WELL. SO, THE GREAT NEWS FOR THOSE OF US WHO PRODUCE GREAT CONTENT, THERE ARE MORE AND MORE BUYERS WHO ARE WILLING TO DO MORE AND MORE TO GET OUR CONTENT. AND AS A RESULT, YOU'RE RIGHT, WE HAVE ANNOUNCED OVER THE LAST FEW WEEKS FIVE OR SIX DIFFERENT DEALS FOR A LIBRARY, FOR CURRENT SHOWS, AND AS FAR AS WE'RE CONCERNED, THE SKY'S THE LIMIT AND THAT WILL CONTINUE INTO THE FUTURE.
FABER: YEAH. SOMETHING ELSE, OF COURSE, THAT HAS BEEN TYPICAL OF THE COMPANY NOW IS YOUR SIGNIFICANT REPURCHASE OF SHARES.
MOONVES: YES.
FABER: AND ANALYSTS WHO FOLLOW YOU GIVEN THE ANNOUNCEMENT LAST NIGHT EXPECT OVER THE NEXT TWO YEARS YOU'LL BUY BACK MORE THAN A QUARTER OF THE COMPANY. WHY IS THAT THE RIGHT STRATEGY AS OPPOSED TO PERHAPS USING THAT CASH FOR OTHER GROWTH INITIATIVES?
MOONVES: THE GOOD NEWS, DAVID, WE ARE USING CASH THAT WE ARE EARNING. WE ARE NOT BORROWING MONEY TO BUY BACK OUR SHARES. SO, AS A RESULT OF OUR OUTDOOR DEAL WHICH IS IMMINENT, BECOMING AN IPO, WE'LL HAVE AN EXCESS OF CASH AND IT'S CASH THAT WE'RE EARNING. AS YOU SAID, OUR RESULTS ARE PRETTY SIGNIFICANT SO WE HAVE A LOT OF FREE CASH. AND WE FEEL RETURNING VALUE TO OUR SHAREHOLDERS IS VERY, VERY IMPORTANT. THERE'S NOTHING WE'RE DYING TO INVEST IN OR BUY ANOTHER COMPANY. OBVIOUSLY WE ARE INVESTING IN OUR CONTENT. BUT AT THE END OF THE DAY WHEN YOU HAVE THE KIND OF BALANCE SHEET WE HAVE, USING THE MONEY FOR A MAJOR SHARE REPURCHASE IS VERY SIGNIFICANT, SO YESTERDAY WE WERE ABLE TO ANNOUNCE A $2 BILLION BUYBACK IN THE FIRST QUARTER WHICH SHOULD GIVE OUR INVESTORS GREAT CONFIDENCE.
FABER: THAT DOESN'T MEAN, THOUGH, THAT YOU PRECLUDE THE IDEA OF CONSOLIDATION. IS IT POSSIBLE WE'LL SEE CBS -- IT'S BEEN A WHILE SINCE YOU'VE DONE A BIG MOVE, BUT IS IT POSSIBLE YOU WILL TRY TO PARTICIPATE IN COMING CONSOLIDATION SHOULD IT BE THERE?
MOONVES: THERE'S NOTHING OUT THERE THAT WE DESIRE TO HAVE. EVERY ONE OF OUR BUSINESSES IS WORKING TERRIFICALLY. WE COULDN'T BE MORE HAPPY. ONCE WE SPIN OUT THE OUTDOOR DIVISION IN THE NEXT FEW MONTHS WE'RE GOING TO BE ALMOST 50% ADVERTISING, 50% NONADVERTISING. WE LOVE THE BALANCE. WE LOVE OUR ASSETS, SO THERE'S NOTHING OUT THERE THAT I'M SAYING TO YOU IF THIS DEAL IS POSSIBLE WE'D LOVE TO MAKE IT, SO WE'RE FEELING PRETTY GOOD.
FABER: ONE THING THAT'S STILL OUT THERE IS, OF COURSE, THE SUPREME COURT GOING TO RULE ON THIS AEREO CASE. WE HAVEN'T SPOKEN SINCE THAT WASTHE CASE. WHAT ARE YOU GOING TO DO IF THEY, IN FACT, RULE IN FAVOR OF AEREO?
MOONVES: LOOK, WE EXPECT THAT THE SUPREME COURT WILL DO THE RIGHT THING AND SIDE WITH THE PEOPLE WHO ARE PROVIDING THE CONTENT. NOT THE PEOPLE WHO ARE TAKING OUR CONTENT AND USING IT ILLEGALLY WHICH IS OUR POINT OF VIEW. HOWEVER, IF THAT SHOULD HAPPEN, IF THE WORST SHOULD HAPPEN, THERE ARE SO MANY OTHER ALTERNATIVES THAT WILL NOT – SO THIS WOULD NOT AFFECT OUR BOTTOM LINE. OBVIOUSLY THE NETWORKS COLLECTIVELY COULD DO THEIR OWN VERSION OF AEREO, THERE'S A WAY TO PUT OUR SIGNAL ON CABLE WITHOUT PUTTING IT OVER THE AIR. THERE'S ALSO OVER THE TOP FOR US. SO, THERE ARE MANY, MANY ALTERNATIVES TO ALLOW PEOPLE TO RECEIVE OUR SIGNAL NO MATTER WHAT HAPPENS. SO, IT'S SOMETHING THAT OBVIOUSLY THE SUPREME COURT WILL DECIDE BUT IT'S NOT ANYTHING THAT WE'RE DEEPLY CONCERNED ABOUT BECAUSE WE HAVE ALTERNATIVES.
FABER: ALL RIGHT. AND FINALLY, LESLIE, BACK TO OUR FIRST SUBJECT, YOU HAVE AFFILIATE FEE DEALS WITH TIME WARNER CABLE AND COMCAST. I DON'T KNOW IF YOU PAY ONE MORE OR LESS. DO YOU PAY LESS TO COMCAST AND SHOULD INVESTORS BE CONCERNED THAT, THEREFORE, THAT WILL BECOME THE LOWER BAR OVER TIME?
MOONVES: I DON'T THINK INVESTORS SHOULD BE CONCERNED. OBVIOUSLY THERE'S GOING TO BE CONVERSATIONS BETWEEN US AND COMCAST AND THE ONGOING YEARS. WE JUST WENT THROUGH A VERY HARD-FOUGHT BATTLE WITH TIME WARNER CABLE TO GET OUR RATES UP HIGH AND WE'RE VERY PLEASED WITH THAT DEAL. AND ONCE AGAIN, VERY EARLY AND THERE'S A LOT OF DISCUSSION TO BE HAD.
FABER: ALL RIGHT. STILL MAKING MONEY FROM "I LOVE LUCY." I JUST LOVE THAT.
MOONVES: STILL MAKING MONEY.
FABER: LESLIE, AS ALWAYS, APPRECIATE YOUR TIME. THANKS FOR JOINING US.
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