Bloomberg News

Time Warner Cable’s Plea to Washington for CBS Help Is Tuned Out

August 07, 2013

Time Warner Cable’s Plea to Washington for CBS Help Is Tuned Out

Time Warner Cable Inc. stopped sending programming from CBS Corp. owned stations to viewers in New York, Los Angeles, Dallas and other markets on Aug. 2. Photographer: Patrick T. Fallon/Bloomberg

Regulators in Washington probably won’t heed Time Warner Cable Inc. (TWC:US)’s call for help in a dispute that has blocked CBS Corp. (CBS:US) television shows from more than 3 million subscribers in cities such as New York and Los Angeles.

Federal Communications Commission Acting Chairwoman Mignon Clyburn has said the agency lacks the authority to intervene, and rewriting rules for settling such disputes would take too long to end the current disruption, according to Paul Gallant, Washington-based managing director at Guggenheim Securities LLC.

Members of Congress or the FCC “are likely to issue statements urging the parties to reach agreement in the interest of the consumers who now lack access to CBS programming,” Gallant said yesterday in a research note. “Such statements might be perceived as marginally diminishing CBS’s negotiating position.”

A dispute over fees led the cable company to stop sending programming from CBS-owned TV stations to viewers in major cities such as Dallas on Aug. 2. The two sides are arguing over what the New York-based broadcaster charges Time Warner Cable to provide its shows to subscribers, and over rules for streaming CBS content on the Internet. The showdown pits the most-watched U.S. TV network against the second-largest cable provider.

“The best way to resolve this dispute is at the bargaining table,” Shannon Jacobs, a CBS spokeswoman, said by e-mail.

Time Warner Cable, in a letter to the FCC released Aug. 5, asked the agency for “prompt action” to alter the rules to address “coercive” tactics by CBS. Maureen Huff, a Time Warner spokeswoman, declined to comment on the issues.

Fee Dispute

Cable companies have asked the FCC for such changes as stalemates proliferate with broadcasters seeking higher fees for rights to send their programs to subscribers, or to retransmit the shows.

“The commission is disappointed that the respective parties could not reach a retransmission agreement,” Neil Grace, an FCC spokesman, said by e-mail. “We urge all parties involved to resolve this situation as soon as possible.”

The agency hasn’t acted after asking for comments more than two years ago on possible rule revisions. The request followed disputes in 2010, including one between Fox, then a News Corp. unit, and Bethpage, New York-based Cablevision Systems Corp. (CVC:US) that cut World Series broadcasts to 3 million viewers.

Congress probably won’t act quickly, in part because broadcasters are a potent lobbying force present in every lawmaker’s district, Jeffrey Silva, a Washington-based analyst with Medley Global Advisors LLC, said in an interview.

Political Nonstarter

“This is a fight between two parties,” Silva said. “What upside is there from taking on the broadcasters?”

Commercial television and radio stations spent $26.6 million on Washington lobbying in 2012, and gave $11.6 million in campaign contributions for that year’s federal elections, according to the Center for Responsive Politics, a Washington-based nonprofit research group that tracks money in politics.

Cable and satellite TV producers and distributors spent more than twice as much lobbying in 2012 -- paying out $57.2 million -- and gave $14.6 million in campaign contributions, according to the research organization.

Any congressional action would place lawmakers between two powerful forces, said James Gattuso, a senior fellow in regulatory policy for the Heritage Foundation, a Washington-based research group that promotes limited government.

‘No-Win Situation’

“You open a can of worms if you start stepping up on behalf of a network, or on behalf of a cable provider,” Gattuso said in an interview. “It just politically is a no-win situation.”

The FCC decided not to act on earlier disputes, and the Republican-led U.S. House of Representatives is disinclined to intervene in markets, Gattuso said.

Senator Edward Markey, a Massachusetts Democrat, in a letter yesterday to Clyburn asked the FCC to “bring the parties together” for negotiations.

Markey also asked the FCC to investigate CBS’s blocking access to Internet-based video for Time Warner Cable broadband customers. “In such instances, consumers lose their freedom to access the Internet content of their choice,” Markey said.

CBS in a statement posted on a website addressing the dispute said it was blocking access by Time Warner Cable’s Internet customers to CBS episodes.

Representative Anna Eshoo, of California, the top Democrat on the House telecommunications subcommittee, in a statement released yesterday said she would “carefully examine whether changes to the current law are needed.”

Any congressional action would place lawmakers between two powerful forces, Gattuso said.

“You open a can of worms if you start stepping up on behalf of a network, or on behalf of a cable provider,” Gattuso said. “It just politically is a no-win situation.”

Brian Dietz, a spokesman for the Washington-based National Cable & Telecommunications Association, declined to comment. Members of the trade group include New York-based Time Warner Cable and largest U.S. cable provider, Comcast Corp. (CMCSA:US), which also owns broadcaster NBC.

‘Bullying Tactics’

“Policy makers should not reward the bullying tactics of Time Warner Cable or any other pay-TV providers with government intervention into free-market negotiations,” Dennis Wharton, a National Association of Broadcasters spokesman, said by e-mail. The Washington-based group’s members include CBS, NBC, Walt Disney Co. (DIS:US)’s ABC, and Twenty-First Century Fox Inc. (FOXA:US)’s Fox network.

In Senate testimony in June, President Barack Obama’s nominee to lead the FCC, Tom Wheeler, said he’s bothered when “consumers are held hostage over corporate disputes.”

“That’ll be something that I’ll be looking at,” Wheeler told the lawmakers.

Clyburn, who is the agency chairwoman in the interim, said in a March 2011 statement that “the law here is clear: the commission holds limited authority via limited methods.”

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@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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