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CBS Calls Time Warner Cable’s A La Carte Proposal a ‘Sham’

CBS and Time Warner Cable remained far from resolving their dispute blacking out the Eye in New York, L.A. and Dallas, with the broadcaster calling the cable operator’s offer to carry locals on an a la carte basis a “sham” demonstrating the MSO is not negotiating in good faith.

Feud between CBS and TW Cable affects more than 3 million cable customers in New York, L.A. and Dallas, who have been blacked out from receiving CBS programming since Friday at 5 p.m. Eastern.

On Monday, Time Warner Cable CEO Glenn Britt said in a letter to CBS chief Les Moonves that the MSO would reinstate the affected stations for an undisclosed per-subscriber fee Time Warner Cable “reluctantly agreed to” with the same rights as their previous deal.

Alternatively, Britt said, Time Warner Cable would be willing to offer CBS stations to customers a la carte, for a price set by the broadcaster with 100% of those fees kicked back to CBS. The operator distributed the letter to the media at the same time it sent it to CBS, according to the broadcaster.

SEE ALSO: Time Warner Cable CEO: We Are Willing to Offer CBS to Customers A La Carte

In response to the Britt letter, CBS said, “Today’s so-called proposal is a sham, a public relations vehicle designed to distract from the fact that Time Warner Cable is not negotiating in good faith. Anyone familiar with the entertainment business knows that the economics and structure of the cable industry doesn’t work that way and isn’t likely to for quite some time. In short, this was an empty gesture from a company that is expert at them.”

CBS added that it is prepping a “formal response” to Britt’s letter.

Time Warner Cable countered CBS’s statement by saying, “Our efforts to get CBS programming back for our customers are sincere, and we have offered two proposals to accomplish that, while CBS has offered nothing in return… We cannot understand why that is not enough for CBS.”

The exchange of rhetoric Monday indicates the CBS-Time Warner Cable standoff could last several more weeks. Industry analysts have said the cable company will not feel urgency to cut a pact until the debut of the fall TV season along with the start of the NFL’s 2013-14 regular season.

CBS is losing upwards of $400,000 per day in retrans and advertising revenue because of the blackout, according to Wall Street firm UBS. But the ultimate financial impact on the Eye could be minimal if the dispute is resolved within two weeks, UBS said.

Earlier Monday, CBS claimed ratings remained strong over the weekend despite the Time Warner Cable blackout, with “Big Brother” unchanged on Sunday night from week-ago averages. “The influence on the national average is expected to be minimal,” the Eye said, estimating that the outage has had “a minor 1% impact” on total ratings. The blackout could depress ratings for CBS’s summertime hit “Under the Dome,” which airs Mondays.

SEE ALSO: Guest Column: Time Warner Cable-CBS Feud Underscores Need for Congressional Reform

The dispute revolves around a hike in retrans fees CBS is seeking. According to industry analysts, CBS is asking for $2 per subscriber per month for carriage of its owned-and-operated stations in those markets, up from $1 or less currently.

In addition, Britt’s letter alluded to “the digital rights that CBS has provided to others,” which is a reference to expanded video-on-demand and TV Everywhere rights to programming from CBS and Showtime, according to a source familiar with Time Warner Cable’s position in the talks. In general, the operator is seeking access to additional VOD and Internet-video content in exchange for the higher retrans fees CBS has put on the table.

CBS estimated the TW Cable outage affects 3.2 million of its customers in Gotham, L.A. and Dallas; industry analysts previously have put the number at around 3 million subscribers in those markets.

Under federal law, broadcast TV stations may seek “retransmission-consent” payments for their signals from pay TV operators or opt for “must-carry” distribution for no compensation.

In the retrans fight, Time Warner Cable also blacked out Showtime and three other CBS-owned cable channels. The MSO said it would credit Showtime subscribers for the loss of the premium channel as well as provide access to Starz, but would not credit customers affected by the blacked-out CBS stations because those are part of the basic TV package.

In retaliation CBS last Friday moved to block Time Warner Cable’s broadband subscribers nationwide from accessing free, full-length eps on CBS.com and mobile apps. The American Television Alliance — a lobbying consortium whose members include TW Cable, DirecTV, Dish Network, Verizon and others — on Monday called on the Federal Communications Commission to order CBS to restore access to the Internet content to the operator’s customers.

Watch Time Warner Cable’s latest ad spot on the CBS standoff:

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