CBS vs. Time Warner Cable: Big Companies, Bigger Battles

Blackout signals more standoffs to come as companies consolidate

Time Warner Cable Blackout Puts CBS

If the CBS-Time Warner Cable standoff is like most of these fracases, it will be settled relatively soon. Even in the midst of summer — when networks generally have fewer big-ticket attractions in their quiver — it seems unlikely the cable provider can subject the No. 1 broadcaster to an “Under the Dome”-like blackout for very long.

But don’t be surprised if this latest let’s-see-who-blinks-first skirmish is just the first of several bigger battles to come, leaving consumers caught in the middle. In fact, it might just be a preview of coming attractions.

Key players in the media business are all moving toward consolidation. Ad agencies are combining to better combat new players. TV stations are making deals to create larger groups, from Tribune to Gannett. And there’s been plenty of talk about a shrinkage of owners in the cable/satellite business, with John Malone leading the charge in terms of those suggesting there’s a need to create larger entities in order to survive.

These companies are seeking economies of scale, obviously. But the other rationale for adding to their portfolios is establishing a footprint that will give them greater leverage when sitting across the negotiating table from related businesses. Specifically, that means station groups butting heads with multichannel video programming distributors, content suppliers jockeying with ad buyers and so on.

With size and heft comes an ability to better withstand the potential fallout from such a scenario — and to outlast, potentially, the other side in a dispute. That has certainly been the studios’ strategy when dealing with the talent guilds, figuring massive entertainment companies are better able to do without writers, directors or actors for a few months than most of the rank-and-file are able to get by without a paycheck.

Tellingly, CBS just posted record quarterly earnings, which has no doubt whetted its appetite to maximize returns on retransmission fees. And as I noted in an earlier column about AMC’s carriage battle with Dish, Time Warner Cable knows a little something about using programming to arm-twist cable/satellite operators, having done exactly that in launching its regional sports networks featuring the Los Angeles Lakers.

Having spent years pushing “Survivor” and its “Outwit. Outlast. Outplay” mantra, CBS is probably betting it can outmaneuver a big dumb cable company, which people like about as much as public utilities. The main enemy is inertia, since it takes a lot to get consumers to go the trouble of switching providers, which is what TW Cable is banking on.

Yet while the outcome isn’t really in doubt — they’ll find a way to kiss and make up, with everyone declaring satisfaction, if not victory — this won’t be the last time people wind up grumbling about a carriage-swinging contest.

And if history’s any indication, while these corporate behemoths do their best impersonation of “Pacific Rim” — trading blows, without much thought to the collateral damage — they can rely on most of us to just keep sitting there like zombies.