×
You will be redirected back to your article in seconds

Blackout Nation: After CBS-Time Warner Cable Feud, Rules About TV Deals Aren’t Likely to Change

Regulatory changes unlikely in wake of retransmission-consent standoff, despite lobbying by pay TV operators to fix ‘broken’ system

For 32 days, more than 3 million Time Warner Cable and Bright House Networks customers were collateral damage in the fight between TW Cable and CBS over fees and rights to programming.

Now that the two sides have come to terms, in a deal reached over Labor Day weekend, what’s different?

Nothing much at all — except that TW Cable is paying more money to distribute largely the same content supplied by the Eye, yet another thumb on the scale of the rising cost of pay TV. According to industry sources, Time Warner Cable will initially pay somewhat less than $2 per sub monthly for CBS-owned stations (up from 75 cents to $1 previously) rising to the two-dollar mark over the life of the five-year contract.

SEE ALSO: CBS, Time Warner Cable Reach Deal to End Blackout

Pay TV operators have stepped up their calls for regulators and politicians to intervene, arguing that broadcasters have too much leverage in such fights. But don’t expect the rules to change anytime soon, which means more networks are likely to fade to black, either temporarily or indefinitely, in the months and years ahead.

FCC acting chairwoman Mignon Clyburn, in comments Monday after the CBS-TW Cable deal was announced, reinforced the agency’s position that its hands are tied with respect to mediating such disputes or otherwise forcing the companies to settle. “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,” she said.

There simply doesn’t appear any regulatory or legislative movement toward new laws or rules that would stave off TV blackouts, said MoffettNathanson principal Craig Moffett, a longtime industry analyst.

“I’m not sure what the FCC could do, and I don’t think Congress has any appetite to get involved,” he said.

Among the next big possible dust-ups, involving broadcast and cable nets: Dish Network’s agreement with Walt Disney Co. for ABC-owned stations, ESPN and other cable nets, reached back in 2005, is set to expire Sept. 30, 2013. Dish chairman Charlie Ergen last month said the satcaster is prepared to drop ESPN and other Disney networks if the companies can’t reach a deal, while ESPN chief John Skipper last month expressed confidence a deal with Dish would get done.

One of Time Warner Cable’s ulterior motives in digging in its heels against CBS in the standoff apparently was to show to Washington that the system is in dire need of reform. TWC picked the fight “to take advantage of a moment in time to score points with regulators,” Sanford Bernstein analyst Todd Juenger wrote in a research note. The blackout was the longest of a major broadcaster since the Federal Communications Commission adopted the retrans rules in 1992.

TW Cable CEO Glenn Britt said in a statement the MSO was “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. 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.”

Time Warner Cable also was trying to win Internet-streaming rights for the Eye’s shows, arguing that paying higher retrans fees entitled it to additional VOD content. But the cable company lost that battle: TW Cable would not pay extra for those rights, whereas CBS is able to cut deals with subscription VOD providers like Netflix, Amazon and Hulu for such secondary windows.

SEE ALSO: Should the U.S. Government Ban TV Blackouts?

According to the National Assn. of Broadcasters, there is no problem with the current rules — just some of the players. The trade group says 89% of the blackouts related to retransmission-consent disputes in the last two years have involved one of three operators: Time Warner Cable, DirecTV and Dish Network.

“Rather than drum up a phony crisis that would inject government into the free-market, these three firms might better spend their time working toward amicable resolutions over TV programming most valued by viewers,” NAB exec VP of communications Dennis Wharton said. “We believe broadcasters deserve to be fairly compensated for the most-watched programming on television.”

Note that a smaller retrans spat between TW Cable and Milwaukee-based Journal Broadcast Group, affecting stations in four U.S. markets, remains unresolved after nearly six weeks with those stations still blacked out after going dark July 25.

SEE ALSO: Next Big TV Fight Looms: Would Dish Drop ESPN and ABC?

The American Cable Association, which reps about 850 smaller and midsize independent cable companies, contends the problem is widespread and growing worse.

The CBS-TW Cable fight “showed that the retransmission consent market is broken and outdated rules governing these negotiations need to be updated to reflect current market conditions,” ACA president and CEO Matt Polka said in a statement. “If CBS can leave millions of pay-TV viewers in the dark for 32 days, no one can say with a straight face that the marketplace is working well for consumers.” The group has proposed the FCC adopt rules that let TV signals remain on the air while retrans deals are hammered out.

The National Cable & Telecommunications Assn. declined to comment on the issue of retrans reform. Its members include Comcast, which owns NBCUniversal.

More Biz

  • Mo'Nique

    Mo'Nique Files Race and Sex Discrimination Suit Against Netflix

    Mo’Nique filed a discrimination suit against Netflix on Thursday, alleging that the streaming service broke the law when it gave her a lowball offer for a comedy special. The comedian — whose legal name is Monique Hicks — accused Netflix of race and sex discrimination. In January 2018, Mo’Nique called for a boycott of Netflix, [...]

  • Saugus High School

    Shooting at California's Saugus High School Leaves Two Dead, Multiple Injured

    Two teenagers died and three others were injured after a shooter opened fire on Thursday morning at Saugus High School in Santa Clarita, about 40 miles north of Los Angeles. The shooter, a 16-year-old student, pulled a handgun from his backpack and opened fire on five other students on the school’s quad around 7:30 a.m., [...]

  • Variety New Leaders Agents and Managers

    Variety's New Leaders 2019: These Representatives Are Making a Mark on the Industry

    Every year, Variety seeks to identify the next generation of leaders in the entertainment business, looking for representatives in the creative community, film, TV, music and digital. This year’s group has a heavy New York focus: We selected executives from forward thinking companies such as Spotify, Group Nine and Endeavor Audio, as well as writers [...]

  • Lilly Burns Tony Hernandez

    Jax Media Soars by Amplifying Unique Voices of Auteur TV

    Jax Media has emerged during the past few years as one of television’s busiest and buzziest production companies. The New York-based company headed by four partners — Tony Hernandez, Lilly Burns, John Skidmore and Brooke Posch — has an enviable track record of scouting new voices and executing stylish shows on a less-than-stratospheric budgets. The [...]

  • ELAINE WELTEROTH Variety New Leaders

    Variety's New Leaders: Ronan Farrow, Elaine Welteroth Are Making a Big Social Impact

    Every year, Variety seeks to identify the next generation of leaders in the entertainment business, looking for representatives in the creative community, film, TV, music and digital. This year’s group has a heavy New York focus: We selected executives from forward thinking companies such as Spotify, Group Nine and Endeavor Audio, as well as writers [...]

  • Tommy Thayer, Gene Simmons, Eric Singer,

    Kiss Reveal Final Dates of ‘End of the Road’ Farewell Tour

    Just hours after cancelling their Australia tour due to Paul Stanley’s bout with influenza, Kiss have announced the “last legs” of their “End of the Road” farewell tour. According to the announcement, the trek will officially come to a close on July 21, 2021 at a location in the band’s hometown of New York City [...]

  • Bob IgerSimon Weisenthal Gala honoring Bob

    Bob Iger Joins MasterClass Roster for Course on Business Strategy and Leadership

    Disney chairman-CEO Bob Iger has signed on to the MasterClass digital education service, offering a course in business strategy and leadership. The course, available as of Thursday, will detail Iger’s view on the importance of taking bold steps and embracing mistakes in business. Iger also promises to dig into “case studies” of some of Disney’s [...]

More From Our Brands

Access exclusive content