October 17, 2017

CBS Returns, Triumphant, to Cable Box

The agreement between the two sides restored the CBS network and its related channels, including Showtime, to millions of cable subscribers largely in three major cities: New York, Los Angeles and Dallas. The outcome underscored the leverage that the owners of important television content, especially sports like N.F.L. football, retain over distributors like cable systems. The looming National Football League season, which starts this week, includes key games every week on CBS.

“It was hugely important,” an executive involved in the negotiation said Monday night. (The executive asked not to be identified because the participants agreed not to offer details on the agreement beyond the official announcement.) Indeed, Time Warner Cable executives had said earlier that a reason the company decided to remove the CBS stations in early August was because of the recognition that it would lose leverage the closer it got to the N.F.L. season.

David Bank, a media analyst for RBC Capital Markets said, “With the content, especially the N.F.L. and CBS being the No. 1 network in the ratings, you just have to believe they are going to win every time.”

The two sides did not release any specific information on the terms of the agreement. They had battled for exactly a month over an increase in fees CBS was seeking for the right to retransmit CBS stations in the three major cities and some other locations on Time Warner Cable systems. Another crucial issue was whether CBS would retain the digital rights to its content, which it wanted to sell to Web-based distributors like Netflix and Amazon.

Executives on both sides acknowledged early in the talks that CBS was seeking an increase to about $2 per subscriber, up from about $1. Separate statements from the chief executives of each company indicated that the outcome apparently tipped heavily toward CBS. Its president, Leslie Moonves, said in a memo to the company staff that the network had secured virtually all of what it was seeking.

“We are receiving fair compensation for CBS content,” Mr. Moonves said. He specifically included not only additional fees for CBS content, but also the retention of the digital rights.

Glenn A. Britt, Time Warner Cable’s chairman and chief executive, conceded that “we certainly didn’t get everything we wanted.”

CBS did make “some minor concessions” to get the deal settled, the executive involved in the negotiation said. The talks extended until 3 a.m. Monday.

In his statement, Mr. Britt said Time Warner Cable ultimately “ended up in a much better place than when we started,” though he did not specify how. He also again pushed for some kind of change in the rule that granted networks the rights to compensation from cable companies for their programming

“The rules are woefully out of date, are the primary reason cable bills are rising,” Mr. Britt said. “We sincerely hope that policy makers heed that call and take action to prevent these unfortunate blackouts soon.”

Time Warner Cable pressed throughout the monthlong impasse after it removed CBS’s stations from its systems for some form of government intervention, from either the Federal Communications Commission or Congress, but none materialized.

While the acting F.C.C. chairwoman, Mignon L. Clyburn, said on Aug. 9 that she was distressed at the standoff and was “ready to consider appropriate action if this dispute continues,” it continued for another three weeks without her intervening. Several media analysts said early in the dispute that the commission’s options were limited because the right of a station owner to seek retransmission compensation was granted in a law passed by Congress in 1992.

Monday evening, Ms. Clyburn issued a statement saying: “I am pleased CBS and Time Warner Cable have resolved their retransmission consent negotiations, which for too long have deprived millions of consumers of access to CBS programming. 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.”

Both sides hurled accusations during the standoff. CBS executives said Time Warner Cable removed their stations unnecessarily (including Showtime, which requires a separate fee from subscribers) and negotiated in a dysfunctional manner, and Time Warner Cable accused CBS of making exorbitant demands and performing a disservice to all Time Warner Cable subscribers by blocking the CBS.com Web site. But the settlement was ultimately a financial arrangement between two partners, one of which had content the other needed to satisfy its customers.

Mr. Bank said that, if anything, the deal may make it easier for networks to press cable and other distributors like satellite systems to squeeze out more favorable fees, without all the noise and recriminations this dispute inspired. CBS quietly renegotiated a deal with the FiOS bundled Internet phone and television service owned by Verizon in the midst of its conflict with Time Warner Cable.

“I think the Verizon deal happening when it did was not helpful to Time Warner,” Mr. Bank said. “It was probably really damaging.”

Article source: http://www.nytimes.com/2013/09/03/business/media/cbs-and-time-warner-cable-end-contract-dispute.html?partner=rss&emc=rss