News Column

CBS, Time Warner End Blackout

September 4, 2013

A deal between CBS Corporation and Time Warner Cable Inc. restored CBS and Showtime channels Monday evening to Time Warner Cable customers -- including some 2 million in Orange County and Los Angeles -- just in time for NFL kick-off weekend.

The deal resolved a dispute between the media giants about how much Time Warner should pay to transmit programs from CBS and CBS-owned channels and how CBS would sell its programming to other digital providers such as Netflix. The companies planned to restore CBS-owned stations, including Showtime Networks, CBS Sports Network and Smithsonian Channel to Time Warner Cable customers across the country within 24 hours, CBS officials said.

For Time Warner customers, the deal means an end to a monthlong blackout of CBS-owned stations, including KCBS-TV and KCAL-TV in Los Angeles, on Time Warner systems in Southern California and seven other U.S. metro areas.

The blackout started early last month as the two media companies locked horns over transmission fees. It meant no "Undercover Boss," no "60 Minutes Sunday" and no "Under the Dome" for Time Warner customers. CBS sports fans missed out on coverage of the country's biggest annual tennis tournament, the U.S. Open from Flushing Meadows, N.Y.

The companies did not disclose the specific terms of the deal announced Monday, but it includes transmission consent, as well as Showtime Anytime and VOD, for CBS stations on Time Warner Cable systems in New York, Los Angeles and Dallas.

"As in all our negotiations, we wanted to hold down costs and retain our ability to deliver a great video experience for our customers," Glenn Britt, chairman and chief executive for Time Warner Cable, said in a statement released Monday. "While we certainly didn't get everything we wanted, ultimately we ended up in a much better place than when we started."

The tone of a CBS "internal memo" circulating Monday evening on Twitter was decidedly more upbeat.

"The final agreements with Time Warner Cable deliver to us all the value and terms that we sought in these discussions," said the memo from CBS Chief Executive Leslie Moonves. "We are receiving fair compensation for CBS content and we also have the ability to monetize our content going forward on all the new, developing platforms that are right now transforming the way people watch television."

Both companies had major stakes in the outcome of the dispute.

Time Warner was attempting to keep a lid on costs. Broadcasting & Cable said CBS was receiving between 75 cents and a $1 per subscriber per month from Time Warner Cable, according to estimates by the investment firm RBC Capital. Industry analysts said CBS wanted to double that to $2.

Also at question was how CBS would sell its programming to other digital providers such as Netflix.

CBS has been the most-watched broadcast TV network for 10 of the past 11 seasons, according to the Nielsen Co. The network has built its numerical advantage by dominating among viewers 50 and older, while its rivals pursued the 18-to-49 demographic that advertisers prefer.

For the first time in 21 years, however, CBS placed first in viewership among 18- to 49-year-olds during the 2012-13 season, while holding on to its 50-plus stronghold.

CBS said the blackout was the first time its programming had been dropped from a cable company.

The companies were also under increasing pressure from lawmakers and regulators. Federal Communications Commissions officials quoted in recent news reports said the FCC was working with the companies to resolve the dispute and restore programming to customers.

"At the end of the day, media companies should accept shared responsibility for putting their audience's interests above other interests and do all they can to avoid these kinds of disputes in the future," acting FCC Chairwoman Mignon Clyburn said Monday, according to a news report published Monday evening on the Los Angeles Times website.

--Register staff writer Mary Ann Milbourn contributed to this report.

Contact the writer: mcook@ocregister.com

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