After weeks of haggling and mud-slinging, CBS and Time Warner Cable remained deadlocked over retransmission fees — resulting in blackouts Friday afternoon of CBS stations in New York, L.A., Dallas and other markets, as well as Showtime and other CBS cablers for the operator’s 11.9 million subscribers.
“We deeply regret this ill-advised action, which is injurious not only to our many affected viewers, but also to Time Warner Cable itself,” CBS said in a statement. “Throughout this process, Time Warner Cable has conducted negotiations in a combative and non-productive spirit, indulging in pointless brinksmanship and distorted public positioning — such as the fictional and ridiculous 600% increase CBS supposedly demanded — while maintaining antiquated positions no longer held by any other programming distributor in the business.”
Time Warner Cable confirmed shortly after 5 p.m. that it was in the process of removing CBS stations primarily in New York, L.A. and Dallas, and that CBS-owned Showtime, The Movie Channel, Flix and Smithsonian Channel are also going dark for customers nationwide. CBS is forcing the operator to pull primetime shows from the Time Warner Cable video-on-demand service.
“We agreed to an extension on Tuesday morning with the expectation that we would engage in a meaningful negotiation with CBS,” the cable operator said in a statement. “Since then, CBS has refused to have a productive discussion. It’s become clear that no matter how much time we give them, they’re not willing to come to reasonable terms.”
Friday’s blackout comes after TW Cable earlier this week began removing CBS local owned-and-operated stations and the cable nets after the previous deadline at midnight Eastern Monday. However, the operator halted the blackout just minutes later after CBS came back to the negotiating table.
It appears that this will be the first extended blackout for CBS-owned stations in almost a decade. The fight shows that both sides are willing to go to the mat in the public wrestling match — with CBS intent on grabbing more revenue from pay TV operators, and TW Cable pushing back against hikes in programming costs.
Showtime is blacked out for not only Time Warner Cable customers, but also for subscribers of Bright House Networks, which has an arrangement with the larger operator to piggyback on its programming deals. According to Showtime, it had authorized TW Cable to continue carrying the channel while negotiations continued.
“Showtime has been working in good faith with Time Warner Cable to work out a contract, and is deeply disappointed with Time Warner Cable’s decision to pull Showtime channels,” premium cabler said. “The service interruption is not only completely unnecessary, but totally punitive to our subscribers, and will impact and inconvenience millions of Time Warner Cable and Bright House Networks subscribers in major markets across the country.”
CBS Sports Network is not part of the current negotiation between the companies, and is still being carried on Time Warner Cable.
SEE ALSO: PREVIOUSLY: Time Warner Cable Still Carrying CBS Stations, Cable Networks Amid Clash Over Fees
The blackout could last days or even weeks. With the companies digging in their heels, Time Warner Cable customers are likely facing “an extended multi-week blackout of the CBS network in NY, LA and Dallas,” BTIG Research analyst Rich Greenfield wrote in a blog post earlier Friday, prior to the channels going dark. For Time Warner Cable “this is ‘the battle’ to fight. Simply put, this is a ‘Once-in-a-Cable Lifetime Opportunity’ to battle retrans.”
CBS, in its statement Friday, said “we hope and believe this period of darkness will be short and that we can all get back to the business of providing the best entertainment, news and sports to the Time Warner Cable customers we both serve.”
Many analysts believe CBS has greater leverage in the dispute but have pointed out that Time Warner Cable will not feel real urgency to reach a pact until the start of the fall TV season and the start of the NFL’s 2013-14 regular season.
The blackout of CBS’s 13 owned-and-operated stations affects an estimated 3 million Time Warner Cable customers. Those stations are: 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.
Time Warner Cable alleges CBS is demanding an “unprecedented” premium, asking for more than 600% what the cable operator pays in retrans fees to independent CBS affiliates in other parts of the U.S.
“CBS is making outrageous demands for the right to continue carrying their channels. We are holding the line against broadcasters who continue to make their stations available free over-the-air and online while they demand more from cable customers without delivering any additional value,” the MSO says in an update on its TWCConversations website.
CBS has countered that it’s underpaid relative to its popularity among TW Cable customers, receiving less in retrans fees than lesser-viewed cablers.
“What CBS seeks, and what we always have sought from the beginning, is fair compensation for the most-watched television network with the most popular content in the world. We will not accept less,” the Eye said. “We will not sign away rights not granted to others. We will not give up our channel position or any other asset by which our viewers identify us.”
CBS testily referred to the series of hourly deadline extensions from 8 p.m. to midnight ET on Monday, characterizing that as a stalling tactic by Time Warner Cable. “We will also not be subjected to pointless maneuvers like a series of one-hour extensions and mini-drops that do nothing for either side but annoy our viewers.”
Currently Time Warner Cable pays between 75 cents and $1 per subscriber monthly for CBS stations, and the Eye has likely been seeking around $2 per sub, according RBC Capital Markets analyst David Bank.
Watch Time Warner Cable’s video of the “hard work” involved to take channels off its systems:
CBS says its stations have never gone dark because of a retrans dispute with a cable operator, although in 2004 Dish Network pulled several of the Eye’s locals as part of a broader carriage fight with then-CBS parent Viacom. In the past five years, the Eye boasted, it has reached deals with all other major pay TV operators, including Comcast, DirecTV, Dish Network, Cablevision, Verizon FIOS and AT&T U-verse.
In an FAQ on its website, Time Warner Cable advises customers on alternatives to receive the blacked-out programming, including using an over-the-air antenna for free or for those in NYC by signing up for Aereo, the Internet video streaming startup that is being sued for copyright infringement by CBS and other broadcasters. The operator notes that CBS.com provides recent airings of the Eye’s primetime and daytime shows while other programming is available through pay services like Amazon.com, Hulu, Apple’s iTunes Store and Netflix.
Pay TV operators have increasingly complained about broadcasters seeking dramatic fee increases, with a surge in blackouts in the last several years.
Currently, in a separate retrans fight, Journal Broadcast Group’s CBS and NBC stations in four markets remain off the air for TW Cable customers. The operator says the station group is asking for a 200% rate hike, while Journal Broadcast says the increase is only pennies per day per viewer.
CBS is running a 30-second spot about the blackout on its websites, outdoor digital signs (such as digital panels leading into the NYC subway system) and CBS Radio: