You will be redirected back to your article in seconds

CBS Ready to Pull TV Signals in War With Time Warner Cable: Analyst

Broadcaster’s stations in NY, LA, Dallas and five other markets could go dark on MSO July 24

It could be a long, hot summer for Time Warner Cable and CBS, whose contract fight has erupted into a public war of words in one of the biggest TV distribution battles to date.

About 3 million Time Warner Cable subscribers in New York, Los Angeles, Dallas and five other markets could lose CBS-owned TV stations on July 24, with the two sides currently deadlocked over retransmission fees. For now negotiations are continuing, with the deadline next Wednesday at 5 p.m. Eastern.

CBS “appears ready to pull signal from Time Warner Cable to achieve what it believes is a fair-market retransmission-consent fee rate as negotiations between the two are stalling,” RBC Capital Markets analyst David Bank said in a report Friday.

The Eye, unlike other broadcasters, has never allowed local TV stations to go dark in a contract dispute. But now, CBS is taking a much more aggressive stance as it tries to boost retrans revenue. CBS is aiming to bring in $500 million in retrans fees this year, roughly double 2012.

Time Warner Cable is holding your favorite shows hostage,” CBS says in TV ads that started running Thursday in affected markets, pointing viewers to KeepCBS.com. The broadcaster claims it’s continuing to work in “good faith” to resolve the dispute but warns that “Time Warner Cable might drop CBS from its TV lineup.”

Time Warner Cable, for its part, asserts that CBS is asking for more than 600% what the cable operator pays in retrans fees to independent CBS affiliates in other parts of the U.S. TWC is running newspaper ads in New York, L.A. and Dallas urging customers to “contact Congress” and has its own site at TWCConversations.com with its talking points.

“CBS is driving up the cost of cable TV — charging higher and higher prices for shows they give away for free online and over the air,” the ads say. “It’s time to stand up and say no to broadcasters demanding unreasonable prices.”

SEE ALSO: CBS Comes Out Swinging Against Time Warner Cable in Contract Fight

Currently Time Warner Cable pays between 75 cents and $1 per sub monthly for CBS, which is now likely seeking around $2 per subscriber, according Bank.

Since TWC and CBS last struck their broad agreement in 2008, “We believe there has been a significant ‘re-value’ for broadcast network TV content since that time due to a number of factors including increased VOD and potential TV Everywhere utility, the higher cost of sports programming (especially NFL) and a more competitive distribution environment where demand has increased for quality content,” Bank wrote.

CBS seems to be “massively under-indexing on affiliate fees,” Bank wrote. Despite the Eye’s No. 1 position in primetime ratings, and an average audience six times what is typical for the top 20 cable networks, CBS currently earns monthly fees on par with top cablers, he said.

Other analysts also say CBS is in a strong position to demand more money for its stations, and will use the upcoming National Football League season as leverage in the fight with TWC. CBS-owned stations reach about 25% of Time Warner Cable’s 11.9 million video subscribers (about 3 million) while TWC households account for only 2% to 3% of CBS’s total audience, according to Davenport & Co. analyst Michael Morris.

“We understand that distributors will work to be vigilant about controlling costs,” Morris wrote in a research note. “However, we see them in a significantly weaker position when it comes to retransmission renegotiations with the major station owners… overall, TWC economics are significantly more at risk in a potential disruption.”

But BTIG Research analyst Rich Greenfield believes the leverage in this battle is far more balanced than in past retrans and programming disputes: “CBS would be making a critical mistake to think it had an overwhelmingly strong negotiating position,” he wrote in a blog post.

A total of 13 CBS-owned stations in eight Time Warner Cable markets are at risk: WCBS and WLNY (independent) in New York; KCBS and KCAL (independent) in L.A.; KTVT and KTXA (independent) in Dallas; WBZ and WSBK (independent) in Boston; KDKA and WPCW (The CW) in Pittsburgh; WBBM in Chicago; WKBD (The CW) in Detroit; and KCNC in Denver.

TWC and CBS also are negotiating carriage terms for Showtime Networks and Smithsonian Channel among other cable nets. However, according to a source familiar with the talks, those deals could be done separately from the CBS TV stations, which are a far bigger bone of contention. Carriage of TVGN (formerly TV Guide Network), a 50-50 partnership between CBS and Lionsgate, is not part of the talks.

The companies’ prior agreement from 2008 expired June 30. They extended it through July 24 while talks continued, but it now appears unlikely that CBS will agree to postpone the deadline again.

Popular on Variety

More Biz

  • Sony Music Promotes Mark Cavell and

    Sony Music Promotes Mark Cavell and Per Hauber to Lead Masterworks, Classical Labels

    Sony Music Entertainment today announced the promotions of Mark Cavell and Per Hauber to lead the Company’s Classical, Jazz, Broadway and non-traditional contemporary music business. Based in New York, Cavell will become President of Sony Masterworks and Hauber will become President of Sony Classical, based in Berlin. They will report to Sony Music chairman Rob Stringer and [...]

  • Department of Justice

    United States Soldier Charged After Planning to Bomb Major News Network

    The Department of Justice has charged a United States Army soldier who allegedly plotted to bomb a major U.S. news network, distributed information online on bomb-making, planned to join a violent far-right paramilitary group in Ukraine and insinuated an assassination attempt on Democratic presidential candidate Beto O’Rourke. Jarrett William Smith, a 24-year-old U.S. infantry solider [...]

  • Geox Campaign Siffat Haider

    Finding Love and Serenity Through Food

    With a near-obsessive and rapidly growing family of 61,000 followers on Instagram, Toronto-based lifestyle influencer/blogger Siffat Haider travels the planet — and the city — sharing all things beautiful and delicious in a curated visual diary, @icingandglitter. Haider has been featured on numerous blogs, news outlets and commercial sites and is founder/host of the popular [...]

  • Led-Zeppelin-1971

    'Stairway to Heaven' Copyright Case Argued at 9th Circuit

    The attorney who claims that Led Zeppelin ripped off the acoustic guitar opening in “Stairway to Heaven” faced tough questioning on Monday before an 11-judge panel of the 9th Circuit Court of Appeals. Francis Malofiy argued the case on behalf Michael Skidmore, a journalist who represents the estate of the late Spirit frontman Randy Wolfe. [...]

  • Latin Recording Academy Names Manuel Abud

    Latin Recording Academy Names Manuel Abud COO

    As it celebrates its 20th anniversary, the Latin Recording Academy today announced several key changes to its leadership team. Former Azteca America president/CEO Manuel Abud has been named the organization’s chief operating officer, while 19-year Latin Grammy vet Luis Dousdebes takes on the new position of Chief Awards, Membership and Preservation Officer. Also, Aida Scorza, who has worked [...]

  • 'OpenAP' CEO David Levy Sees New

    'OpenAP' CEO David Levy Charts New Course

    A consortium built by some of the nation’s biggest media outlets to win new kinds of advertising is quickly changing its course. Founded in 2017 by Viacom, 21st Century Fox and Time Warner, OpenAP was initially designed to help marketers figure out ways to buy advertising based on reaching segments of audience that aren’t defined [...]

More From Our Brands

Access exclusive content