SBD/August 5, 2013/Media

Time Warner Cable Blackout Of CBS Channels Continues As NFL Season Looms

About 3 million subscribers nationwide are affected by the blackout
A blackout of CBS' flagship net on Time Warner Cable systems in N.Y., L.A. and other markets "dragged on through the weekend with no sign of any resolution," according to Ramachandran & Stewart of the WALL STREET JOURNAL. The companies by yesterday afternoon "couldn't even agree on whether any talks were under way." A TWC spokesperson said negotiations were "ongoing," while CBS said "there are no negotiations taking place at this time." About 3 million subscribers are "affected by the blackout, which covers CBS Corp.'s Showtime premium channel as well as the CBS network." TWC broadband subscribers also are "blocked from watching CBS.com, one of the outlets the cable operator had suggested to its subscribers as an alternative for some primetime CBS programming during a blackout" (WALL STREET JOURNAL, 8/5). In L.A., Joe Flint reports in the L.A. area, more than 1 million TWC subscribers "lost access to CBS properties." TWC said that it would "provide customers a credit for the loss of Showtime but not CBS." Both companies "continue to take shots at each other in the media." Sources said that CBS currently is "getting less than $1 per subscriber, per month" from TWC and "would like to get that figure into the $2 neighborhood over the life of its next contract." Some consumers are "taking to Twitter and elsewhere to express their anger about the blackout." TWC "appears to be taking more heat than CBS, although many customers are angry at both companies" (L.A. TIMES, 8/5).

CBS IN DRIVER'S SEAT? Flint noted the dispute "covers only CBS-owned channels." CBS affiliates carried by TWC are "not part of this fight." CBS' channels may be off TWC "for a while, given the wide gulf between the two companies." A CBS source said, "We will not blink, I promise you that." But some analysts "don't think the fight will last long." Pivotal Research Group Senior Research Analyst Brian Wieser said, "The broadcasters will win. They have the most clout. Time Warner Cable will pay more money, and CBS will make more money. The only question is how long the signal will be off" (L.A. TIMES, 8/3).

NFL IS THE CRUX: In N.Y., Bill Carter cited sources as saying that the dispute could last "about 10 days to as long as six weeks." The later date is "associated with the start of the NFL season, a package of programming that everyone involved agrees cannot be denied to subscribers" (N.Y. TIMES, 8/5). Carter noted the upcoming start of the NFL season "might be a driving factor in why Time Warner Cable acted now." BTIG Research Media Analyst Richard Greenfield said that TWC was in "'a once-in-a-lifetime position' to fight this battle because at the moment it does not face the overwhelming leverage of NFL games and the most popular prime-time shows." However, CBS does have the PGA Championship this weekend (N.Y. TIMES, 8/3). TWC VP/Public Relations Maureen Huff in an e-mail wrote, "CBS is trying to delay this negotiation right up to [the] NFL season, which is not fair to our customers. We've accepted numerous extensions at this point, but it's become clear that no matter how much time we give them, they're not willing to come to reasonable terms" (THE DAILY). UBS analyst John Janides yesterday in a report wrote that the CBS net going dark in TWC markets "could cost CBS Corp. about $400,000 per day, including lost retransmission revenue and a loss of advertising dollars at both the network and the stations" (HOLLYWOODREPORTER.com, 8/5).

VOX POPULI: In N.Y., David Carr writes making the standoff "worse is the suggestion by both sides that they are only trying to stick up for us." Carr: "Here's an idea for both parties: Leave us out of it. ... Pretending that you are fighting on our behalf rather than in the interests of your shareholders and executives is infantilizing and unbecoming" (N.Y. TIMES, 8/5).

TV ON THE NET: Cablevision President & CEO James Dolan on Friday said "there could come a day" when his company stops offering TV service, making broadband its primary offering. The WALL STREET JOURNAL's Ramachandran & Peers note if cable TV operators "drop TV service, charging only for broadband, channel owners would have to sell directly to the public or through Web outlets." Dolan in a 90-minute interview said that "on the rare occasions he watches TV, it is often with his young children, who prefer to watch online video service Netflix, using Cablevision broadband" (WALL STREET JOURNAL, 8/5).
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