Bloomberg News

Time Warner Cable-CBS Talks Proceed as Blackout Averted

July 30, 2013

Time Warner Cable-CBS Talks Pass Deadline Without Blackout

Time Warner Cable Inc. said CBS sought retransmission fees seven times higher than network’s affiliates in other markets get for the same program. Photographer: Andrew Harrer/Bloomberg

Time Warner Cable Inc. (TWC:US) and CBS Corp. (CBS:US) continued negotiations over program rights past a deadline, averting a blackout in the biggest U.S. media markets even after both sides said some signals were briefly cut off.

“At the request of CBS, we have halted going dark on their channels,” Maureen Huff, a Time Warner Cable spokeswoman, said today in an e-mailed statement. Dana McClintock, a spokesman for CBS, confirmed the two sides were continuing to negotiate. A new deadline was set for Aug. 2 at 5 p.m. New York time, Time Warner Cable said.

Some of Time Warner Cable’s 3 million-plus subscribers in New York, Los Angeles and Dallas began losing local and national CBS news and entertainment, such as “60 Minutes” and “Under the Dome” before the two sides agreed to keep talking, according to Huff. The second-largest U.S. cable company said CBS sought retransmission fees seven times higher than network’s affiliates in other markets get for the same program.

“We offered to pay reasonable increases, but CBS’s demands are out of line and unfair,” Huff said earlier. “They want Time Warner Cable to pay more than others pay for the same programming.”

CBS’s Showtime, The Movie Channel, Flix and Smithsonian channel were also at risk of being dropped by Time Warner Cable.

CBS and Time Warner Cable have extended their negotiating deadline several times in the past week. After originally agreeing to a deadline of 5 p.m. New York time yesterday and then moving it to 8 p.m., the two sides began extending it every hour until the deadline reached midnight. The blackout threatened to be the first of a top broadcaster by a major pay-TV carrier in New York, the nation’s largest TV market, since Cablevision Systems Corp. (CVC:US) shut down Fox for two weeks in 2010.

Fair Compensation

“CBS remains resolute in the pursuit of fair compensation for our programming,” Shannon Jacobs, a spokeswoman for CBS in New York, said in an earlier statement. “In the end, of course, an agreement will be reached.”

Time Warner Cable, based in New York, has encouraged customers to sign up with Aereo Inc. to watch CBS. Aereo is a startup service, backed by Barry Diller, that sells access to the broadcast networks online for $8 a month without paying retransmission fees for the right to air the programming. Aereo is currently being sued by New York-based CBS.

When a major channel is dropped from a pay-TV service, 7 percent of subscribers end up switching providers, while 16 percent watch the lost channel online, according to a survey from Park Associates, a market research firm based in Dallas. The survey, conducted in the third quarter of last year, looked at 2,500 households and asked residents what they did the last time they lost a channel in a fee dispute.

Highest Rating

CBS is the most-watched television network, ahead of Comcast Corp.’s NBC, Walt Disney Co.’s ABC and 21st Century Fox Inc.’s Fox.

Retransmission fees have become a sticking point in negotiations between pay-TV providers and broadcasters. CBS’s retransmission revenue jumped 62 percent in the first quarter from a year earlier.

Pay-TV operators will pay more than $3 billion in retransmission fees this year, according to data compiled by research firm SNL Kagan.

CBS, controlled by Chairman Sumner Redstone, fell 2.1 percent to $52.39 yesterday in New York. Time Warner Cable declined 1.4 percent to $115.23.

To contact the reporters on this story: Alex Sherman in New York at asherman6@bloomberg.net; Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editors responsible for this story: Rob Golum at rgolum@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • TWC
    (Time Warner Cable Inc)
    • $148.88 USD
    • 0.33
    • 0.22%
  • CBS
    (CBS Corp)
    • $61.35 USD
    • -0.45
    • -0.73%
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