SHARING AMERICA'S TECH NEWS FROM THE VALLEY TO THE ALLEY
As a result, CBS’s stations, and cable networks owned by CBS, remained blacked out in many areas, including large parts of New York, Los Angeles and Dallas.
The continuing impasse resulted in two popular shows on the pay cable channel Showtime, “Dexter” and “Ray Donovan,” being unavailable to fans in those areas on Sunday night. And it means that the most popular drama of the summer, CBS’s “Under the Dome,” is likely to be blocked to millions of viewers on Monday night.
CBS released a statement on Sunday saying no negotiations were taking place and it stressed its willingness to continue talking. A Time Warner Cable spokeswoman, Maureen Huff, said in an e-mail message: “We’re ready and willing to talk at any point. We want to resolve this, and are absolutely negotiating in good faith.”
The cable company said in a statement that it regretted “the inconvenience to our customers (and their viewers) and look forward to resolving the situation as soon as possible.”
But several media analysts suggested the standoff might be protracted, with predictions ranging from about 10 days to as long as six weeks. The later date is associated with the start of the N.F.L. season, a package of programming that everyone involved agrees cannot be denied to subscribers.
Indeed, timing seems to be the dominant factor driving the dispute. CBS has continued to insist that it would make its programs available to the cable company throughout the negotiations and that the cable company acted now to remove them from its service because Time Warner Cable would lose leverage as the football season got closer — a point the cable executives do not dispute. They acknowledge they need to push the issue now.
Time Warner Cable has also acted at a time when similar showdowns are increasingly common across the country. The impasse in almost all the disputes centers on what are known as retransmission fees — compensation for putting broadcast stations on cable systems. In this case CBS, according to several analysts following the situation, has asked for an increase from about $1 per subscriber to about $2.
The cable company initially labeled the demand exorbitant, and said the costs would have to be passed on to customers. (Cable prices have increased recently to an average of $60 to $70 a month, though analysts point out that the per-channel price has actually dropped because so many new channels have been added.)
More recently the two sides have suggested that the fee issue is either close to being resolved or that the differences are not insurmountable. But there is deep disagreement over concessions Time Warner Cable wants from CBS related to programming — mostly its catalog of older shows, which CBS sells to digital distributors like Netflix and Amazon. Time Warner Cable wants access to those programs on terms it says are fair and reasonable; CBS says that the company is essentially seeking something free, and that these deals have nothing to do with the retransmission negotiation anyway.
Broadcast networks like CBS, ABC, NBC and Fox gained the right in 1992 to demand compensation for allowing their stations’ signals to be carried on cable systems. At first deals were made for cable channels owned by the network, but more recently the broadcasters began demanding cash, seeking to pay for increased program costs by gaining the same dual revenue stream, along with advertising, that cable networks enjoyed. The fees have been steadily increasing. SNL Kagan, a research company, estimated that revenue from retransmission fees will increase to $4.3 billion in 2015, from about $2.4 billion last year.
CBS executives have cited the popularity of their network’s shows to justify a fee price closer to what successful cable networks get from cable operators. ESPN, for example, gets the top price of any network, $5.54 monthly per subscriber, according to SNL Kagan.
David Bank, a well-regarded analyst with RBC Capital Markets, said CBS’s financial demands were not only justified, “I would argue they are almost a bargain.” He noted that CBS spends more than $4 billion a year on programming, “four to eight times as much” as cable networks getting similar subscriber fees spend, and that CBS has an audience about five times the size.
But Time Warner Cable has countered with an argument that CBS is a broadcaster, not a cable network, and has access to public airways.
That argument is misleading, Mr. Bank said: “It’s almost irrelevant to be available over the air. Nobody watches television that way anymore.”
People may be forced to if the dispute drags on. Time Warner Cable has suggested that viewers buy antennas and watch CBS the old-fashioned way, a stance that cable companies have taken in the past in showdowns with broadcasters. Few viewers have ever done that — and the approach would not even be effective in large sections of Manhattan, which has a high concentration of Time Warner Cable homes, because the broadcast signals are disrupted by tall buildings.
The cable company has proposed other solutions for its inconvenienced customers, including signing up for the new subscription service Aereo, which provides broadcast stations over the Internet.
Already the standoff has drawn unhappy reaction from some local officials. It invaded the New York mayor’s race this weekend. One candidate, Christine C. Quinn, the City Council speaker, said that city lawmakers would hold a hearing on the dispute on Thursday.
“Television service should not be dependent on the whims of a bitter corporate standoff,” she said, adding that a large number of New Yorkers “subscribe to Time Warner Cable and expect access to each and every channel they pay for.”
Some analysts said Time Warner Cable’s ultimate aim was to bring in political support for its opposition to growing demands for higher fees from broadcasters. But those options are limited. Mr. Bank noted that “what CBS is doing is perfectly legal” because broadcasters won the rights to negotiate retransmission consent from Congress.
Robert M. McDowell, a former commissioner of the Federal Communications Commission, labeled these disputes “trench warfare where the consumers get caught in the middle,” but added: “The F.C.C.’s powers in this area are very limited. The cable companies would have to go to Congress to get the law changed.”
For that reason, and the long history of customer outrage landing heavily on the cable operator, Mr. Bank said he questioned why Time Warner Cable had pushed this confrontation. “I don’t think it’s going to go great for them,” he said.
But one lesson, he suggested, should be drawn from the latest showdown between a broadcaster and a cable outlet. “Don’t let your agreement run out in the summer,” he said. “Wait for football season.”
Thank you, TiA