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More Static: Time Warner Cable Denies Cramping CBS’s Internet-Video Style

Cable operator seeks to retain digital rights, which broadcast exec suggests would ‘hamstring’ dealings with Netflix, Amazon and others

Time Warner Cable and CBS, even as they resumed talks to end the blackout affecting millions of cable customers, kept the accusations flowing as a CBS exec suggested the MSO is seeking to retain digital content rights to “hamstring” the Eye’s ability to cut deals with Netflix, Amazon and others — a charge the operator adamantly denied.

More than 3 million Time Warner Cable customers in New York, L.A. and Dallas saw CBS stations go dark Friday, Aug. 2, after the companies failed to come to terms on a retransmission-consent deal. The operator also pulled Showtime and three other CBS-owned cablers from lineups nationwide.

Martin Franks, CBS’s exec veep planning, policy and government relations, said at a New York City Council committee hearing Thursday that Time Warner Cable wants to maintain terms of the companies’ “hopelessly outdated” 2008 pact under which the operator would receive “incredibly valuable CBS content for free.”

“(P)erhaps their real aim here is to use those outdated terms to hamstring our ability to do business with Netflix, Amazon, Hulu Plus and other new entrants that pose a new competitive threat to their former, cozy, unchallenged monopoly status,” Franks said.

He continued, “CBS is not going to become Time Warner Cable’s accomplice in trying to throttle those new services.”

SEE ALSO: Did CBS Blackout on Time Warner Cable Boost Piracy of ‘Under the Dome’?

In response, Time Warner Cable said, “We categorically deny that we are trying to keep CBS from doing business with any new entrant. Both our expired and proposed agreements with CBS place no restriction on their ability to sell all of their product to Netflix, Amazon, Intel or any other entity, or continue to give all of their best content away for free online, as they have to date.”

Time Warner Cable’s position is that because CBS is asking for a large rate hike in retrans fees, the cable operator should retain access to a broad selection of on-demand content — including the ability to offer entire current and past seasons through VOD and “TV Everywhere” services. CBS has balked at that request because that would reduce the value of the content’s streaming rights, which company wants to sell to the likes of Netflix or Amazon.

Time Warner Cable currently pays 75 cents to $1 per subscriber for CBS’s local stations, and the Eye is likely seeking up to $2 per sub over time, according to RBC Capital Markets.

Meanwhile, after CBS stations went dark on Time Warner Cable systems, the Eye began blocking the operator’s broadband customers from accessing full-length episodes on CBS.com and mobile apps. CBS’s blockade isn’t illegal but has been decried as anticonsumer by public-interest groups.

According to CBS’s Franks, the updated contractual terms and conditions the broadcaster is offering Time Warner Cable “are virtually identical to what every other cable, satellite or telco provider has signed up for with us in the past few years.”

Since 2006, when CBS became a standalone company, the Eye has negotiated more than 100 retransmission-consent agreements “without even a hint of public discord, much less having our channels dropped, until now,” Franks said.

SEE ALSO: CBS Stations, Showtime Go Dark for Time Warner Cable Customers

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