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AT&T, CBS Continue to Spar Over Carriage Terms

AT&T and CBS are already locked in a battle over whether or not the telecom giant will be able to carry programming from local CBS stations. Now they are fighting about the fight.

Speaking during a call with investors Wednesday, AT&T Chairman and CEO Randall Stephenson suggested the two companies are not that far apart on terms that would make CBS stations available again for approximately 6.6 million subscribers to the company’s DirecTV or U-verse services. “The bid asked candidly is not that wide, but it’s kind of an interesting dynamic,” Stephenson said. “We sent, that was a reasonable, fair offer over five days ago, and that’s been crickets. We haven’t heard anything.”

“CBS is seeking fair market value,” CBS said in a statement Wednesday, noting that it is “now seeking market rates from AT&T similar to what AT&T’s competitors believe our programming is worth.” The company added that it “remains ready and available to negotiate and as of today its offer of an unconditional 30-day extension still stands.” CBS also said it was prepared to entertain extending its deal with AT&T for a time to keep discussions active, but suggested AT&T wanted the extension agreement to encompass terms that were not part of the deal that had existed between the two media titans.

The back and forth is the latest example of a carriage blackout in recent weeks. AT&T is also battling with station-owner Nexstar over a retransmission deal, while satellite-broadcaster Dish is tangling with Meredith Corp. for carriage of its stations. Interestingly, AT&T and Dish are also at odds: WarnerMedia’s HBO, now part of AT&T, has been off Dish for months due to a stalemate in carriage negotiations.

At issue for many of these companies is a growing reliance on the stable fees carriage agreements generate. At a time when more viewers are migrating to streaming services, notching top linear audience levels is more difficult, and that crimps the flow of money being paid by Madison Avenue to advertise on TV. If getting top dollar from sponsors is more onerous, then media companies are forced to rely more heavily on the retransmission fees they get from cable and satellite operators.

Coming to the terms that would keep the money flowing, however, has become much more difficult. In the case of CBS and AT&T, for example, AT&T balked at a deal calling for higher prices without gaining the ability to sell its customers access to the “CBS All Access” streaming-video service. CBS, meanwhile, said in recent days that its most recent deal with AT&T “is nowhere close to today’s fair market terms for CBS content – to which AT&T’s competitors have repeatedly agreed.”

AT&T is fighting back by telling subscribers to use new technology to watch CBS programming, including Locast, a service that provides local TV signals in certain cities via digital means. AT&T in June donated $500,000 to Sports Fans Coalition NY, the non-profit group that operates Locast. “These technologies may even flow right into the programming guide in our DirecTV lineup and some customers are at a pretty significant rate finding other ways of getting through the content,” said Stephenson. “So that one could take a while. CBS, I’m optimistic, but hopefully we’re just get them back to the table and get this closed.

 

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