CBS and Time Warner in a high-stakes standoff

The dispute has resulted in a blackout of some channels for customers in New York, Los Angeles and Dallas. Both companies will lose as the battle drags on.

By Jonathan Berr Aug 5, 2013 12:53PM
Image: Television (© Glow Images/Getty Images/Getty)Will CBS (CBS) or Time Warner Cable (TWC) be the first to blink in their high-stakes game of chicken that kept legions of golf fans from watching Tiger Woods' latest triumph this weekend? That's tough to say.

At issue is CBS' plan to hike the fees it charges Time Warner Cable to carry its signal, also known as retransmission fees. According to The New York Times, CBS has told analysts that it wants an increase from $1 to $2 per subscriber, which Time Warner has denounced as exorbitant.

The battle has resulted in Time Warner blacking out CBS for customers in New York, Dallas and Los Angeles.

These disputes are increasingly common. In the CBS-Time Warner case, however, there are also disagreements over access to the network's catalog of older shows.

Time, however, isn't on either company's side. CBS can't afford to alienate advertisers ahead of the start of the new television and NFL seasons. For Time Warner, the blackout may encourage customers to try satellite and other alternatives.

Retransmission fees are soaring. According to data from SNL Kagan cited by the Times, those fees were $2.4 billion last year and are expected to hit $4.3 billion in 2015.

There are also advertisers to consider.

The Tiffany Network got more than $2.5 billion in commitments, also known as upfronts, from advertisers for the upcoming television season. Networks base their prices for commercials on the size of the audience they expect to reach. If the shows don't attract the audience the network expects, advertisers are eligible to receive "make goods" -- essentially free commercial time -- in compensation.

Though the promised audience numbers is a closely guarded secret, these targets probably will be difficult to hit if CBS continues to block an estimated 3.5 million Time Warner Cable customers in New York, Los Angeles and Dallas. Other CBS-owned cable networks, including Showtime, are also affected.

Negotiations between the two companies have broken down and now analysts are now expecting the fee dispute to linger through September.  

CBS is the top-rated network, thanks to hits such as "Two Broke Girls," "Two and a Half Men"  and "Big Bang Theory," which Advertising Age estimates each fetched more than $200,000 for a 30-second spot last season. CBS and Comcast's (CMCSA) NBC are in the midst of a $28 billion deal to broadcast NFL games, so there are financial pressures there too. Pro football is by far the most popular sport.
 
What the CBS-Time Warner dispute shows is that the pay television industry is breaking down as fights over fees become more common. Congress needs to act before it comes apart completely.

--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.


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19Comments
Aug 5, 2013 1:36PM
Aug 5, 2013 1:56PM
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I pay $30/mo for Internet. I have a smart TV for streaming Netflix, etc to supplement the free digital channels I get. I was once a slave to DirectTV and had the same network blackouts during negotiations as the Time Warner subscribers are experiencing. It's been a year now and I am still alive...yes, I miss some of the shows I used to watch, but discovered new ones as well. I sure don't miss the blackout crap and rising subscriber fees!!

Aug 5, 2013 3:02PM
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They both suck. And in the end the consumer gets screwed. We pay for cable, cable sells advertising spots. CBS sells advertising. Sounds like everyone is getting paid except for the viewer. If we are subscribing to cable should it not be commercial free? I think that is part of what I pay for. That is how it USED to be. Pirate everything show these morons who have the power. They thrive off of consumer dollars but treat us like crap.
Aug 5, 2013 2:04PM
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Here in the West Coast of Florida, we also lost CBS from our cable company Brighthouse. So tell us which one is the greedy SOB causing this!? Enough...fix it folks!! Stop taking it out on the end user, while you people duke it out.
Aug 5, 2013 3:17PM
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When they, (ALL the networks, and cable/satellite channels) totally ignore the realities, and pay their executives such exorbitant salaries and benefits, also paying the actors such unrealistic amounts for inane performances, something is seriously wrong.  We are supposed to have federal monitors watching out for OUR interests, when in reality, they are being totally ignored.  The politicians are covering their bankrolls and ignoring their EMPLOYERS in this mess.  Granted, so much television nowadays is either ridiculous "reality" shows, or overpriced sporting events, there is not much actual entertainment to watch/listen to nowadays.

Too many people are getting rich off the average viewer nowadays.  By that, I'm referring to the C.E.O.'s, C.F.O.'s, actors, and politicians, not Mr. and Mrs. working person.  (And nowadays, most families do have two earners, just to afford to feed, clothe, and shelter their families.)  And the aforementioned people could actually care less.

Aug 5, 2013 2:13PM
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Try 'rabbit ears' .  They're great for picking up 'over the air' television.  Yes, there are commercials.  And....No....there aren't commercials.   PBS is decent.  Pick and choose the programs and times you have to 'give up'  to watch and listen and then, cut the thing off.  Period.
Aug 5, 2013 2:53PM
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First I do not think for a min that either of the companies here are worried about us the actual consumer, but more about the amount of profit they can squeeze out of us. That being said why would Cable or Satellite companies pay anything for what most consider “Local Channels”. I can get that channel for FREE with an antenna.
Aug 5, 2013 3:12PM
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CBS (along with NBC, ABC & FOX) can be received "off air" meaning all you need to do is have an off air antenna attached directly to your TV.  I don't understand why a cable company or satellite provider would even pay $1 per subscriber for content that the network broadcasts for free.  If I were T/W I would tell CBS to pay me for re-broadcasting their programming.
Aug 5, 2013 3:09PM
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I am a TWC customer and I am absolutely offended by their using me as a pawn in their dispute.  I plan to dump TWC cable and Internet service as a result of this action.
Aug 5, 2013 2:46PM
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The broadcast networks are in their death throes.  In less than 10 years, they'll be playing recycled sitcoms and material they will have to buy from sources like HBO and Netflix.  Good riddance!  They have brought it upon themselves.  CBS is one of the worst.  Some years ago, they first started running 60 minuites (my favorite at the time) in progress after pro football.  Then they pushed their schedule back to play it in entirety, screwing up a viewing schedule if one wanted to watch a show on another network.  The practice continues to this day.  If the sports broadcast doesn't run long, they pad out the time with inane armchair quarterbacking.  Screw 'em.  I only watch a few of their offerings, and hate myself for doing so. 
Aug 5, 2013 3:56PM
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Comcast is the worst. No customer service... No wait, I meant that there is no U.S. based customer service... all of their call centers are in the Phillippines.
Lovely,  huh. I get to try and resolve my cable issues from a person who sounds like they've sucked a half gallon of helium with no English speaking skills or vocabulary.
Hey, Comcast... me don't love you long time!

Aug 5, 2013 3:48PM
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i live in NYC and just got rid of time warner. i will pay $8.00 a month for Aereo and get all of my main local channels with dvr service. i will pay $8.00 a month for netflix and $75.00 a year for amazon prime. that's all i need and it's so much cheaper than time warner. i was paying $141.00 for the triple play (no hbo or showtime either). now my monthly costs with internet will be less than  $70.00. the only part that stinks is that i still have to get my internet service from time warner.  i've seen this all before, about a month or two after the cbs/tw dispute gets worked out, your cable bill will go up a few dollars.
Aug 5, 2013 2:41PM
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Network television (NBC-CBS-ABC) is a joke.  No redeeming value whatsoever.  Nothing but raunchy sit-coms and biased news casts.  Let ESPN and the Golf Channel handle the sporting events, and leave the news to CNN-BBC-FOX.  Just think of all the air time you'd have for some wholesome programming! 
Aug 5, 2013 4:06PM
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I have satellite  and CBS is blacked out. They make the money off advertisements.  If I had antenna I would have to pay nothing for CBS so why do they want to be so greedy.   
Aug 5, 2013 4:34PM
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The networks CBS, NBC. ABC, CNN, MSNBC, should pay the cable net works money to carry the crap they call programs not the other way around. i could care less about them being on my cable.

 

Aug 7, 2013 12:53PM
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Congress?? Why get the government involved? Let the almighty consumer who holds the money work it out. Give us what we like for a reasonable price or we won't pay. 
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