Following a brief blackout at midnight (ET), Time Warner Cable restored CBS-owned broadcast stations, as well as cable services Showtime, TMC, Flix and Smithsonian to its systems. With negotiations rejoined, the companies have extended their contract through Friday, Aug. 2 at 5 p.m.
Around midnight on the East Coast, the cable operator and the programmer both made statements indicating that carriage discussions had broken off and that the stations and networks were disconnecting. But by 12:30 a.m., a Time Warner Cable spokeswoman noted: "At the request of CBS, we have halted going dark on their channels." Shortly thereafter, CBS said the companies "have agreed to continue discussions."
Hence in the first hour of July 30, the parties had resumed their talks, something they had been engaged in much of the prior day via a series of extensions. At around 2:30 a.m., the programmer said "CBS and Time Warner Cable have agreed to continue discussions." About 90 minutes later, the MSO more pointedly noted: "We have agreed to an extension with CBS until Friday, August 2 at 5pm ET, while we continue negotiations."
The companies had faced a 5 p.m. deadline on Monday, July 29, which was pushed back five times until midnight.
That briefly became the witching hour for the broadcaster and Time Warner Cable, as CBS-owned stations in New York, Los Angeles and Dallas briefly went dark on Time Warner Cable systems serving those markets, while premium network Showtime and the other cable channels were disconnected from the No. 2 cable operator's footprint across the U.S.
But then, the parties quickly had a change of heart, reversed course and returned to the negotiating table.
Prior to the resumption of talks early on July 30, Time Warner Cable had issued this statement:
“The outrageous demands for fees by CBS Corporation have forced Time Warner Cable to remove several of its networks and broadcast stations from our customers’ lineups. As of midnight ET, Time Warner Cable customers in New York City, Dallas and Los Angeles will no longer receive their local CBS broadcast stations. In addition, we have been forced to remove Showtime, TMC, Flix and Smithsonian from our lineups across the country. We offered to pay reasonable increases, but CBS’s demands are out of line and unfair – and they want Time Warner Cable to pay more than others pay for the same programming.”
The cable company added: “Fortunately, CBS programming is still available free online at cbs.com and over the air with an antenna. Showtime subscribers can watch some programming at sho.com. For more information on other ways to watch these shows, customers should visit www.twcconversations.com. We regret any inconvenience caused by the CBS/Showtime blackout, and we’re working hard to restore the programming at a reasonable price.
Switching is not the answer; sooner or later CBS will threaten others and go dark, just as they have with Dish in the past and with us today. We thank our customers for their patience, and we hope to resolve this situation soon.”
CBS responded thusly: “In spite of all our efforts to hammer out a fair agreement, Time Warner Cable has dropped CBS and Showtime from its channel lineup effective midnight edt. Meanwhile, they continue to engage in a public campaign of disinformation and voodoo mathematics (featuring wildly inflated percentages) while doggedly restating their positions.”
CBS added that “Time Warner Cable seems incapable of accepting the concept that the value of a company's programming should be in line with its popularity. It is no mystery why this company has dropped more than 50 television stations from its service in the last five years alone, some as recently as last week. CBS remains resolute in the pursuit of fair compensation for our programming and will use the full resources available to us to make sure that Time Warner Cable subscribers are aware of its short-sighted, anti-consumer strategy. In the end, of course, an agreement will be reached. We continue to hope that outcome may be achieved very soon and we can get back to focusing on delivering great content to the customers we share.”
The contract that was signed in 2009 -- covering retransmission-consent of 13 CBS-owned stations in eight markets within TWC’s footprint, including WCBS-TV and WLNY-TV in New York, KCBS-TV and KCAL-TV in Los Angeles and KTVT-TV and KTXA-TV in Dallas-Ft. Worth -- was originally set to expire on June 30, but was extended late last month until July 24. At that juncture, the sides agreed to another interim extension through the 5 p.m. cutoff on July 29, before an additional three-hour negotiating window was opened, and amended again until 9 p.m. and then hourly on to midnight. Following the day's fifth extension, the negotiations bogged down, the signals were removed temporarily and then restored.
The other affected stations are: Boston (WBZ, WSBK), Pittsburgh (KDKA, WPCW-CW), Denver (KCNC), Detroit (WKBD-CW) and Chicago (WBBM).
Carriage discussions between the parties had continued quietly and out of the public’s view until July 18. But at that point, Time Warner Cable and CBS began trading barbs in competing ad campaigns, with TWC claiming the broadcaster is seeking a 600% premium to what other CBS broadcast stations charge it on average. CBS countered that TWC refused to negotiate the same sort of deal that other distributors have reached with the network.
Los Angeles Times has reported that TWC is now paying the CBS stations well under $1 per subscriber. For its part, investment firm RBC Capital estimates that CBS is now receiving between 75 cents and a $1 per sub per month from Time Warner Cable. Analyst Marci Ryvicker of Wells Fargo said the expired CBS-TWC agreement is considered a sweetheart deal, and that the programmer is pressing for a deal that will eventually ramp up to $2 per sub.
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 revenue bucket could fill to $1 billion by 2016, four times the $250 million it held in 2012.
TWC has also been talking about permanently removing CBS from its prized Channel 2 positions in New York and Los Angeles if the stations go dark, noting it has drawn interest in those spots from other programmers. For its part, CBS said in an earlier remarks that it "obviously won’t be making any deals where we are required to change our channel position."
Earlier on Monday, July 29 at the Television Critics Association conference in Beverly Hills, Calif., CBS CEO Les Moonves was asked about the situation with Time Warner Cable. "I really don't want to negotiate in public. That's probably not the best way to do it," he said, noting he had been on the phone negotiating as recently as 15 minutes prior. "It's a very difficult negotiation... I hope we don't go dark. Conversations are happening between a lot of people today."
That they were and into Tuesday morning as well.