UPDATE, 10:49 PM: Hold on. Time Warner Cable now says that “At the request of CBS, we have halted going dark on their channels.” WCBS is still on in the TWC system in New York. CBS says that the companies “have agreed to continue discussions” — shortly after it accused TWC of being “incapable of accepting the concept that the value of a company’s programming should be in line with its popularity.”
PREVIOUS, 9:04 PM: The fight is on. Time Warner Cable says that tonight it will drop CBS-owned stations in New York, Los, Angeles, and Dallas as well as Showtime, TMC, Flix and Smithsonian in all of its systems. It calls CBS’ price demands “out of line and unfair.” It adds that “Switching is not the answer; sooner or later CBS will threaten others and go dark, just as they have with DISH in the past and with us today.”
The dispute centers on the amount of the monthly fee that TWC pays for each subscriber who receives programming from the stations that CBS owns. The companies haven’t discussed proposals in detail, but RBC Capital Markets’ David Bank says the broadcaster was lobbying for as much as $2 per subscriber each month, more than twice the current rate the cable company pays. CBS chief Les Moonves has promised investors that he’ll collect higher fees from pay TV distributors to help offset the $3.6B the network spends each year for its content. The CEO has predicted that CBS will collect $500M in 2015 from pay TV fees, rising to about $1B by 2017. But TWC chief Glenn Britt is leading the cable industry’s effort to hold down skyrocketing programming costs which are cutting into TWC’s profit margins, and, if unchecked, could inspire widespread cord cutting. “People are starting to pay attention to the fact that the multichannel TV package, the big package which is in 90% of the homes, is starting to get too expensive for lower-income people,” he told analysts last month.
CBS will feel its pain from the black out right away as it sees ratings and ad dollars fall. TWC accounts for about 19% of WCBS’ New York area viewers, 37% of KCBS’ audience around Los Angeles, and 25% of KTVT’s market in Dallas, according to data from SNL Kagan. But time doesn’t appear to be on TWC’s side. Football fans will clamber to see NFL games on the network when the season begins in September. Viewer anger will intensify once the fall primetime schedule kicks in. Meanwhile Charter Communications and its leading shareholder, Liberty Media’s John Malone, are circling for an opportunity to make a bid for TWC. Britt is cool to the idea. But he just announced that he will step aside when his contract expires at the end of 2013.
Here’s the statement from Time Warner Cable:
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. As of midnight ET, Time Warner Cable customers in New York City, Dallas and Los Angeles will no longer receive their local CBS broadcast stations. In addition, we have been forced to remove Showtime, TMC, Flix and Smithsonian from our lineups across the country. We offered to pay reasonable increases, but CBS’s demands are out of line and unfair – and they want Time Warner Cable to pay more than others pay for the same programming.
Fortunately, CBS programming is still available free online at cbs.com and over the air with an antenna. Showtime subscribers can watch some programming at sho.com. For more information on other ways to watch these shows, customers should visit http://www.twcconversations.com. We regret any inconvenience caused by the CBS/Showtime blackout, and we’re working hard to restore the programming at a reasonable price. Switching is not the answer; sooner or later CBS will threaten others and go dark, just as they have with DISH in the past and with us today. We thank our customers for their patience, and we hope to resolve this situation soon.
PREVIOUS, 7:56 PM: And…midnight ET/9 PM PT.
PREVIOUS, 6:52 PM: Now it’s 11 PM ET/8PM PT.
PREVIOUS, 5:55 PM: They just added another hour, so the deadline is 10 PM ET/7 PM PT. Or not.
PREVIOUS, 4:54 PM: Time Warner Cable says that negotiators gave themselves one more hour. CBS’ statement says they’ve extended their current arrangement “into the evening while the companies continue to negotiate.” Sounds like they’re close. But we’ll see.
PREVIOUS, 1:48 PM: The companies say that negotiations are “ongoing,” and have given themselves an additional three hours to see whether they can come up with an agreement to keep CBS shows on Time Warner Cable systems in New York, Los Angeles, and Dallas. This is the second time the companies have postponed the deadline for a retransmission consent deal. Last week they moved the trip line from Thursday morning to today at 5 PM ET. This morning CBS chief Les Moonves told TV critics that it’s been a “very difficult negotiation” but added: “I hope we don’t go dark.” CBS and Time Warner Cable shares were unchanged in post market trading shortly after the latest announcement.