CBS, Time Warner Cable Reach Deal to End Blackout

CBS, Time Warner Cable Reach Deal

Moonves: 'We are receiving fair compensation for CBS content'

The month-long carriage standoff between CBS and Time Warner Cable has ended as the sides unveiled a wide-ranging content deal that calls for CBS network, Showtime and other channels blacked out since Aug. 2 to return to TW Cable systems as of 6 p.m. ET Monday.

Financial details of the pact were not released. But a memo to CBS staffers from Eye chief Leslie Moonves indicated that CBS prevailed in one of the major sticking points in the talks, namely the Eye’s ability to strike domestic subscription VOD deals for CBS and Showtime content with the likes of Amazon, Hulu and Netflix.

CBS had sought a fee of about $2 per subscriber per month for the retransmission consent rights to its CBS O&O stations covered under the deal, up from between 75 cents and $1 previously, according to analysts. Nobody was talking specifics on Monday, but it’s understood that the price tag stayed below $2 a sub at the outset while it will come close to the two-buck benchmark by the end of deal term, which is said to run about five years.

“The final agreements with Time Warner Cable deliver to us all the value and terms that we sought in these discussions,” Moonves wrote. “We are receiving fair compensation for CBS content and we also have the ability to monetize our content going forward on all the new, developing platforms that are right now transforming the way people watch television.”

TW Cable chief Glenn Britt maintained that the cable operator had been able to temper CBS’ financial demands in the negotiations.

“As in all of our negotiations, we wanted to hold down costs and retain our ability to deliver a great video experience for our customers,” Britt said in a statement. “While we certainly didn’t get everything we wanted, ultimately we ended up in a much better place than when we started.”

SEE ALSO: CBS-TW Cable Brawl: Politicians, Pundits Advance Their Own Agendas

The Labor Day accord brings to an end the longest blackout for a Big Four O&O group stations in major markets in the 20 years since the FCC’s retransmission-consent rules mandated that cable operators negotiate with station owners for carrying local signals.

Showtime and CBS’ other cable assets also became leverage points in the retrans talks with TW Cable, as is common in retrans talks for diversified media congloms.

The blackout of the Eye’s O&O stations affected more than 3 million TW Cable subscribers in New York, Los Angeles, Dallas and other markets. Immediately after Time Warner Cable removed the stations Aug. 2, CBS blocked all of the MSO’s broadband subscribers from accessing full episodes on and mobile apps — a move that drew sharp criticism from politicos and consumer-advocacy groups, besides irritating TW Cable customers.

The loss of Showtime, Smithsonian Channel and two other cablers was system-wide across Time Warner Cable’s 11.9 million subscribers and also customers of Bright House Networks, which has a deal to piggyback on TW Cable’s programming agreements. (During the blackout, the cable company continued to carry CBS Sports Network, which was covered under a separate deal.) Showtime is said to benefit significantly from the new pact, which also brings expanded distribution for Smithsonian and CBS Sports Network.

TW Cable, in turn, gets expanded VOD rights for Showtime and CBS programming, including access to Showtime Anytime, the premium network’s version of TV Everywhere that streams content to an array of Internet-connected devices. In fact, fans of CBS’ summer hit “Under the Dome” should be able to catch up on the five most recent episodes of the show on VOD “as soon as (TW Cable) can get the episodes up on their system,” according to a CBS rep.

Industry observers expected the sides to reach an agreement by this week in preparation for the formal start of the NFL season. As always, CBS’ carriage of AFC football games was a key leverage point in the talks. Sources said CBS’ coverage of the U.S. Open Tennis Championships tournament, which heads into its final rounds this week, was also a pressure point, particularly in the Gotham market where TW Cable is the dominant cable provider (and a lead sponsor of the tennis tourney).

TW Cable may have “scored some points in policy circles by raising attention about the asymmetry of these kinds of disputes,” but with the approaching NFL season the operator “ultimately had no choice but to settle,” Moffett Research principal Craig Moffett said in an email. “We may never know the final terms, but you can be sure that the settlement was ultimately a lot closer to CBS’ ask than to TWC’s bid.”

The saber-rattling on the deal began more than two months ago, as the initial July deadline for a deal approached. Both sides employed the now-familiar weapons in a carriage agreement, with dueling newspaper and radio ads as well as websites making the case to consumers why the other side was being unreasonable.

SEE ALSO: Time Warner Cable Will Credit Showtime Subs for Blackout, But Nothing for Loss of CBS

CBS, like other broadcasters, insisted that it should be paid sub fees commensurate with top cable networks because the Eye ranks among the most-watched channels on TW Cable’s lineup. TW Cable accused the Eye of holding viewers hostage while it sought fee hikes that it claimed were 600% more than what it pays CBS affiliates in other parts of the country.

Retrans wrangles that spill over into the public eye have become more commonplace in recent years, as major station owners began demanding significant cash in retrans deals. The global financial meltdown of the 2008-2009 period walloped the local TV advertising market, which spurred the largest station group owners to focus on alternate sources of revenue.

Negotiations between CBS and TW Cable execs continued pretty steadily throughout the long blackout. The final details were sewn up during the holiday weekend in a flurry of conference calls and email exchanges, sources said.

Moonves, in his memo, cited Eye chief operating officer Joe Ianniello and CBS TV Distribution prexy Ray Hopkins as the drivers of the dealmaking. TW Cable is in the midst of a management shuffle as Britt is retiring at year’s end. His successor, Rob Marcus, played the role of closer as the sides zeroed in on an agreement late last week.

Britt in his statement continued his call for the FCC to overhaul its retrans rule, arguing that it gives broadcast TV station owners too much leverage to pull signals in negotiations.

“We are also encouraged by the 50-plus consumer organizations and legislators that supported our call for Congress and the FCC to reassess the 1992 retransmission consent rules,” Britt said. “The rules are woefully out of date, are the primary reason cable bills are rising, and too frequently leave our customers without the programming they love.  We sincerely hope that policymakers heed that call and take action to prevent these unfortunate blackouts soon.”

Acting FCC chairwoman Mignon Clyburn avoided wading into the dispute, even as it dragged on. At present, the FCC — according to its interpretation of the 1992 Cable Act — has little authority to intervene into private business negotiations, unless one side files a formal complaint that the other is not dealing in good faith.

“At the end of the day, media companies should accept shared responsibility for putting their audience’s interests above other interests and do all they can to avoid these kinds of disputes in the future,” Clyburn said in a statement Monday.

SEE ALSO: Time Warner Cable Subscribers Sue Over CBS, Showtime Blackout

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  1. James says:

    While it is understandable for companies to disagree on issues, there should have never been a blackout of any of the channels in question, after all both TWC and CBS answer to we the viewers. As for CBS’s basic channel, there was no loss for me since they only carry two shows worth watching Big Bang Theory and NCIS, the rest of their progamming is trash.

  2. This was going to end, no matter what, before the first regular season NFL game… which it did.

    What needs to end is the practice of being forced to pay for unwanted channels. I don’t speak Spanish so why should I pay for 15+ channels here in Southern California that I will NEVER watch. The same goes for the shopping channels; they should pay ME to receive them.

    This is just the highest profile of what will be many more retransmission fights which will only force people — where it works — to buy an over-the-air (OTA) antenna.

    But the business model is clearly broken and cord-cutting is becoming a viable alternative to cable. Between on-demand via providers like Amazon, all-you-can-eat subscriptions like Netflix, the days of the $100/month cable bill are history.

  3. Steve Tapp says:

    Retransmission fees are not warranted by the pure economics of it. The more viewers who see a network’s ads, the more they can charge advertisers for them; and cable companies cannot overlay their own ads without violating the network’s compilation copyright, absent agreement. The networks got their lackeys in Congress to allow them to tap into cable companies’ monopoly profits. Regarding using non-broadcast channels to leverage retransmission fees, I’m tempted to look up “tying arrangement” in an antitrust law book. I’m a cord-cutter anyway, since Comcast encrypted even Limited Basic locals that WERE going out on clear QAM. People, get yourselves an antenna and an A/B switch if you need it, watch your sports OTA if you’re that kind of viewer, and quit being used as pawns in this game. If you want an idea for a better law, require all cable companies to provide a separate input for OTA antenna along with cable coax on all their set-top boxes and require cable companies to use a channel numbering scheme that lets you switch back and forth between cable and OTA with OTA channel numbers respected and avoided by the cable companies offerings, which can still include the generally inferior picture quality they carry network channels in because of the more highly compressed signals crammed onto a cable bandwidth crowded with bundles of channels you do not want in your way yet have to pay for.

  4. Michael Coe says:

    I only wish that my subscription rate increases were in direct proportion to those experienced be the company responsible for the retransmission. Rate to the cable/satellite company goes up twelve cents per viewer and my bill goes up $1.50. I have access to over 300 channels yet less than. 20% are true news, sports or entertainment – remaining channels are PPV, infomercials, shopping, religious or secondary transmissions or HD of a channel also offered. Wifi and streaming (a la carte) are hopefully going to put these dinosaurs out of our misery.

  5. Ed says:

    Bought an antenna for $30 – didn’t miss a game. Cancelled Showtime. Getting $20 back for the antenna. Knew they would settle before the new season started.

  6. Scuba Girl says:

    And how much is all of this new retrans agreement going to cost us, the subscribers?

    Well, TWC?


  7. Joli says:

    Well it was said right here that it would happen by football season. I am left very angry because I missed a lot of my Dodger games, including today, how about the rest of you Dodger long time fans?

  8. BD says:

    How could they DARE miss those NFL Revenues!!!!

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