Back to the Future

Time Warner Cable Goes Old School: Free Rabbit Ears in CBS Blackout


Time Warner Cable Goes Old School: Free Rabbit Ears in CBS Blackout

Photograph by Trevor Hart/Gallery Stock

And on the 21st day, they turned to the rabbit ears.

Time Warner Cable (TWC), locked in a dispute with CBS (CBS) over rates for programming rights, told some 3 million subscribers in affected areas that it would distribute indoor TV antennas—yes, that tried-and-true technology from the 1950s—so that local CBS stations can be viewed. “Remember that CBS shows do remain available over the air for free via antenna,” the nation’s second-largest cable operator said in a middle-of-the-night e-mail, likely causing more than one subscriber to wonder why she pays a monthly cable bill.

CBS and Showtime haven’t been available on Time Warner Cable systems in New York, Los Angeles, Dallas, and elsewhere since Aug. 2, with CBS retaliating by blocking its websites from all the cable operator’s Internet subscribers. In the e-mail sent early Friday, Time Warner notes that customers can surf to this content online via the connection provided by their mobile phone provider. Time Warner Cable also directed its customers to iTunes (AAPL), Amazon.com (AMZN), and Netflix (NFLX) as other ways to watch CBS shows.

“We are trying to strike a balance between our desire to restore the channels as soon as possible and our responsibility to all of our customers to hold down the rising cost of TV,” the company said. “If we agreed to every outrageous demand made by every television network, cable TV bills would skyrocket. We know you think they’re high enough already.”

The free antenna offer is available for customers at Time Warner Cable’s retail outlets in five markets affected by blackouts, including Milwaukee and Green Bay, Wis. The company is also offering a $20 voucher for people to buy antennas at Best Buy (BBY) stores. Time Warner Cable will also show the Tennis Channel for free, just in time for the Aug. 26 start of the U.S. Open, along with the Starz Kids and Family channel. Maureen Huff, a Time Warner Cable spokeswoman, says the offers are similar to ones the company has used in prior blackout conflicts. “We just do everything we can to help them get through the fight and stick with us,” she says.

Over-the-air broadcasts require a digital tuner and relatively obstacle-free path to a local station’s transmitter, free of tall buildings, water, and mountains. In parts of Manhattan and Los Angeles, those obstructions can prohibit the broadcasts to many homes. But for millions of others, ironically, those trying rabbit-ears may be surprised by the quality, which is not subject to the compression most cable systems employ to transmit channel signals more efficiently. Outfitted with an antenna, recent-vintage televisions will display a subtle but noticeably richer, higher-resolution image over the air than they get via cable. These models also usually come equipped with a tuner. (Full disclosure: I watch all the CBS I want via the $20 antenna that’s been planted behind my plasma TV for several years, with electricity my only direct cost.)

In a related development, CBS and Verizon Communications (VZ) reached a three-year deal on Aug. 22 for retransmission rights for about 3.5 million Verizon FiOS video customers. “Time Warner Cable has been offered almost exactly the same deal for CBS carriage to which Verizon has agreed,” CBS Chief Executive Les Moonves said in a memo to employees. “In many aspects of the deal, Time Warner Cable is demanding different terms than any other company in the business. I am frankly mystified by what appears to be a lack of urgency to resolve this matter for their customers.” Huff declined to comment on the Verizon deal.

The dispute isn’t taking much of a toll on Time Warner Cable, which is likely to suffer “little impact” from the skirmish, Guggenheim Securities analyst Sabina Nyckowski wrote in a client note today, raising her target price on the company by $21, to $111, citing higher broadband Internet prices and growth in that business.

In the grand scheme, after the current intransigence wanes, or the NFL season starts, Time Warner Cable should tread cautiously around antennas. Hipsters from Williamsburg to Silver Lake may take to them like artisanal pickles or overalls: Old-school rabbit ears may just become the hot new home accessory.

Bachman is an associate editor for Businessweek.com.

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Companies Mentioned

  • TWC
    (Time Warner Cable Inc)
    • $143.49 USD
    • -1.48
    • -1.03%
  • CBS
    (CBS Corp)
    • $53.5 USD
    • -0.82
    • -1.53%
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