The big TV broadcaster and the satellite distributor are at loggerheads over how much Dish should pay to carry CBS’s highly-rated programs, which include NFL broadcasts, “The Late Show with Stephen Colbert,” and “The Big Bang Theory.” As a result, CBS programming was removed from Dish early Tuesday morning. Dish subscribers who count on the service to serve up fare from a CBS-owned station can’t see it. The disagreement means 28 local channels in 18 markets across 26 states are off the air until the two sides can agree upon terms for a new contract.
At the root of the issue is money. CBS has in recent years demonstrated new eagerness to use its top-rated broadcast programming to eke out new deals with distributors of all sorts, while Dish has cultivated a reputation for holding hard-nosed negotiations in recent years with everyone from Time Warner’s Turner to 21st Century Fox. When CBS and Dish last parried over their last contract, in 2014, subscribers lost access to CBS for a period of a few hours.
“I’d say we are frustrated. We never wanted to go dark in the first place,” said Warren Schlichting, Dish executive vice president of marketing, programming and media sales, in an interview. Dish feels the price CBS is asking for its flagship network and cable outlets Pop, Smithsonian Channel and CBS Sports Network is unreasonable, the executive said – and Dish believes it can’t get CBS without taking everything else.
“We would drop them if we could, but if they are going to force us to take them, we are certainly not interested in overpaying,” he said. “It’s a significantly higher price for CBS than we ever thought we’d be paying.”
But a person familiar with negotiations said CBS is seeking the same terms from Dish it has sought from other distributors in its most recent efforts to secure what is known in the industry as “retransmission” fees. The company feels it should be getting better terms in exchange for its programming, which typically lures more viewers than competing fare. “CBS, as a stand-alone network, generates over 10% of the total ratings across the entire television landscape, including all of cable and broadcast,” said Joe Ianniello, CBS Corp.’s chief financial officer, during an August call with investors. However, today, we are only getting 2% of the distribution fees. So you can see why we’re so confident in the upside here.”
The person familiar with the talks said Dish regularly pays higher fees for Walt Disney’s ESPN, though much of CBS’ programming wins bigger viewership and noted CBS is the most-watched network of the 300 different programming options Dish offers.
“We are ready when they are” to resume talks, said Schlichtling.
Federal regulators take a dim view of blackouts, which have been on the rise in recent years as traditional media companies press to secure better distribution deals in the wake of major disruption to viewership. As linear TV audiences migrate to on-demand programming delivered via broadband, advertisers are bound to follow. And while there are new efforts afoot to monetize digital audiences through advertising, programming fees locked in over the course of contracts that last three or more years represent a more stable stream of revenue.
Since 2010, failed negotiations between distributors and content providers have resulted in more than 800 blackouts, according to the American Television Alliance, an advocacy group that represents cable, satellite and telecommunications companies. In 2017, the group has counted 212 such events – the worst year on record, by its reckoning.