CBS Invests in Production Company Behind Netflix’s ‘Santa Clarita Diet’

February 10, 2017, 8:29 PM UTC
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Fortune Brainstorm TECH July 15th, 2014 Aspen, CO 11:35 AM BIG BANG QUERY: WHAT’S NEXT FOR VIDEO? Jim Lanzone, CEO, CBS Interactive
Les Moonves, CEO, CBS
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CBS has taken an ownership stake in Kapital Entertainment, the independent production company behind such series as HBO’s Divorce, CBS’s Life in Pieces, and Netflix’s Santa Clarita Diet.

CBS will provide co-financing for Kapital’s programming and distribute it but will not have exclusive rights to its shows. Kapital, which is run by producer Aaron Kaplan, will maintain its autonomy and can sell shows to competitors of CBS. Terms of the deal were not disclosed.

For CBS, the deal marks another step in owning more content and thus being able to generate greater revenue through deals with international affiliates and streaming video providers after they air.

As advertisers are increasingly shifting their dollars from TV to online, media companies are looking toward other sources of revenue such as selling to the likes of Netflix (NFLX) and Amazon (AMZN). By owning the content, CBS is positioning itself to gain revenue from those deals, whether those shows are CBS shows or not.

“With all of these new revenue streams like international sales and the Netflix of the world, it makes a lot better sense to own the content,” CBS CEO Leslie Moonves, told Reuters in an interview. “We are going to own a piece of everything that Aaron does, whether it is for CBS, or for HBO (TWX) or for whoever.”

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The first project under the new deal is a pilot “9J, 9K, and 9L,” which is being co-produced by Kapital with CBS Television Studios for CBS.

CBS (CBS) is interested in other deals where it could have a stake in content, but Moonves noted that Kapital was a unique opportunity given how many series it puts out a year.

“This wouldn’t work with a normal writer, producer who does one or two shows a year,” Moonves said, noting that Kapital currently has six pilots, three of which are with CBS.

“A success on another network means we do well too,” he said.

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