CBS, Time Warner Cable Retrans Dispute Heats Up

Programmer Mounts Ad Campaign Saying MSO Could Drop Stations; TWC Claims CBS Wants 600% Increase in Fees

After keeping discussions quiet before and following the expiration of their contract last month, CBS and Time Warner Cable got loud about their retransmission-consent negotiations on Thursday.

The programmer launched a TV ad campaign in New York, Los Angeles and Dallas that warns Time Warner Cable subscribers that the distributor is “threatening to hold your favorite TV shows hostage and drop CBS.” 

The spot’s images places a number of CBS shows, including NCIS, The Big Bang Theory, Late Night with David Letterman, 60 Minutes, local news programming, syndicated fare, and sports like the NFL, PGA Championship and the U.S. Open Tennis Championships, behind lock and chains.

For its part, the nation’s No. 2 cable operator said CBS is seeking a 600% jump in fees for the same programming it currently offers.

The parties’ contract for retransmission of the signals of stations in eight markets, including CBS’s owned-and-operated stations -- WCBS-TV New York, KCBS-TV Los Angeles and KTVT-TV in Dallas-Ft. Worth  -- as well as carriage of premium network Showtime, CBS Sports Network and Smithsonian Channel – expired on June 30. However, CBS granted TWC an extension until 5 p.m. on July 24 and they have continued to try and reach a renewal. However, that’s when there could be a disconnect for the stations and perhaps the cable services. CBS said it has never been dropped by a cable company.

Moreover, July 24 also marks the date when five stations owned by Journal Broadcast Group that are carried by TWC systems could go dark. Journal Broadcast and TWC also faced the end of their retrans contract on June 30, before the station owner granted an extension through July 10. When the parties failed to strike a new pact, Journal Broadcast invoked the FCC’s so-called sweeps rule that prohibit commercial stations from being dropped during such a ratings period, which in this case concludes on July 24.

CBS, which is also scheduled to mount a similar print campaign in the next couple of days, points the MSO’s customers to and encourages them to “tell Time Warner Cable that you don’t want to lose CBS” via a toll-free number or submission form.

“Time Warner Cable is planning to drop the most popular programming in its entire channel lineup because it won’t negotiate the same sort of deal that all other cable, satellite and telco companies have struck with CBS,” the programmer said in a statement. “Time Warner Cable has dropped nearly 50 channels in the last five years. CBS has never been dropped by a cable company before.  CBS remains committed to working towards a mutually agreeable contract.  In the meantime, however, we are taking the necessary steps to alert fans – at Keep  -- about how they can seek out alternative options for viewing their favorite CBS programs through Time Warner Cable’s competitors.”

The nation’s second-largest MSO responded with its own statement saying that “CBS wants Time Warner Cable to pay over 600% more than we pay in other areas from coast to coast for the same programming.  It’s unreasonable to expect our subscribers and Time Warner Cable to pay that price and we are negotiating very hard for a reasonable price. This is not a standard debate over price increases.  This is different. CBS’s demand for a 600% premium is unprecedented.”

TWC noted that broadcasters have hit customers with 84 blackouts over the past 18 months and added that CBS president and CEO Les Moonves  has “always been outspoken about the programming fees he believes he deserves.  He has said ‘the sky is the limit’ when talking about the price he thinks he deserves for his CBS stations, and he clearly means it. He doesn’t seem to care about our customers’ budgets or the going rates for CBS programming.”

TWC said it would continue to attempt to reach a deal. "We’re going to continue to negotiate and hope to come to a reasonable resolution before our deadline, so that our customers don’t have to endure yet another broadcaster blackout," the company said.

Los Angeles Times has reported that TWC is now paying the CBS stations well under $1 per subscriber. CBS, having long been the most-watched broadcast network, has chosen an aggressive course when it comes to retrans, recording a 62% rise in payments from cable, satellite and telco TV providers in the first quarter of 2013. The company is said to seeking up to $500 million in total retrans fees in 2013. That total could grow to $1 billion by 2016, four times the $250 million it reaped in 2012.