Time Warner Temporarily Removes CBS in Major Cities
Published: July 30, 2013

CBS stations were temporarily removed from cable systems in millions of homes in major cities — including New York and Los Angeles — about midnight on Monday, after protracted negotiations between CBS and Time Warner Cable over fees collapsed.

But after an exchange of recrimination-filled statements, and less than a half-hour of cable interruption, the cable company announced that it had halted the blackout of the stations at CBS’s request.

The mercurial series of events followed a daylong negotiation, which was full of fits and starts. The two sides negotiated all day and night Monday, after weeks of public posturing over which side was being more unreasonable in its demands over what are known as retransmission fees. Throughout Monday night, a series of one-hour extensions in the talks seemed to portend that an agreement was near.

But at about midnight Eastern time, the talks broke down, and Time Warner announced it would drop CBS shows, like its summer hit “Under the Dome,” from the homes of millions of Time Warner Cable subscribers. In addition, Time Warner Cable said it would remove the Showtime pay cable channel, home of series like “Homeland,” along with the other cable channels owned by CBS, including TMC, Flix and Smithsonian.

In statements, each side blamed the other. Time Warner Cable said, “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.” It called CBS’s fee demands “out of line and unfair,” and added, “Sooner or later CBS will threaten others and go dark.”

In its early statement, CBS said, “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. Meanwhile, they continue to engage in a public campaign of disinformation and voodoo mathematics (featuring wildly inflated percentages) while doggedly restating their positions.”

CBS predicted a settlement would eventually be reached but noted the steps it would take to put pressure to make an agreement. “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 shortsighted, anti-consumer strategy.”

Time Warner Cable also stressed that CBS shows could still be seen on TVs with antennas, and at cbs.com.

Around 5 a.m. on Tuesday, Time Warner Cable said that a new deadline of 5 p.m. Friday was in place.

The move to drop the CBS stations was unusual because in numerous recent cases, warring sides from cable and broadcasters have struck last-minute deals to avoid any interruption of service.

But Time Warner Cable had made clear it intended to limit the fee increases to substantially less than what CBS was demanding. Time Warner Cable has put the increase at 600 percent, a figure that CBS executives described as laughably inflated and wrong. Though no official numbers were publicly discussed, one executive familiar with CBS’s negotiating position put the increase that CBS was demanding at 20 to 25 percent.

The retransmission fees are actually tied to local stations. Cable systems are being asked to pay for the right to carry those stations on their systems. In the past, broadcast networks were content with only guarantees of carriage by cable companies.

But broadcasters, with the CBS president, Leslie Moonves, a leading figure, have in recent years pushed hard to create the same kind of secondary revenues stream – subscribers’ fees – that cable networks enjoy. And the broadcasters have had increasing success.

With that success has come more opposition from cable outlets, which have balked at paying similar fees to broadcast stations that they pay to cable networks, even though in most cases, the broadcast stations are far more watched by their customers.

In a few cases, these showdowns have resulted in extended blackouts of stations in homes where viewers pay cable fees for their television service. That occurred three years ago, in a standoff between Cablevision and the Fox network.

CBS has never before had such an impasse result in the displacement of its stations off a cable system. Mr. Moonves said earlier on Monday in Los Angeles that he was reluctant to take that step but would if necessary.

Time Warner Cable is taking a risk in suspending CBS stations, but it is counting on being able to convince customers that their monthly fees will rise if the broadcaster wins on its demands for hefty increases.

CBS’s timing in this dispute leaves the network in a somewhat more vulnerable position, because other than “Dome” and the reality program “Big Brother,” it does not have a deep store of shows vital to viewers this summer.

But if the dispute were to drag on, the prospect of viewers’ losing access to N.F.L. games may become a crucial source of leverage for the network.

Source : http://www.nytimes.com/2013/07/31/bu...arner-cbs.html