2ND UPDATE, 3:20 PM: Time was not on Time Warner Cable‘s side with the NFL season looming. It looks like CBS got the big increase that it wanted but TWC was able to retain most if not all of the digital rights it was offered. It also picked up new rights to Showtime Anytime and VOD, which were not previously available to TWC subscribers. Said FCC Acting Chairwoman Mignon L. Clyburn on the end to the TWC-CBS content carriage dispute: “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.”
UPDATE, 2:40 PM: CBS Corp. head Les Moonves informed employees of the pact Monday evening:
I am pleased to inform you that this evening we concluded our content carriage agreement with Time Warner Cable. Effective immediately, CBS will be back on the Time Warner Cable systems in New York, Los Angeles and Dallas, and Showtime will be available to their subscribers across the nation. All other disruptions to our viewers will cease, and things will go back to normal, with a new and beneficial agreement in place.
This was a far more protracted dispute than anyone at CBS anticipated, but in spite of the pain it caused to all of us, and most importantly the inconvenience to our viewers who were affected, it was an important one, and one worth pursuing to a satisfactory conclusion. That has been achieved. The final agreements with Time Warner Cable deliver to us all the value and terms that we sought in these discussions. 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.
I want to take this opportunity to thank all of those who worked so diligently – around the clock in many cases – to produce this excellent outcome. Thanks go to our Chief Operating Officer, Joe Ianniello, who spearheaded the negotiating efforts, and to Ray Hopkins, our new President of Television Distribution, who was our chief negotiator. Supporting their efforts were the tireless teams at Law, Marketing, Communications and virtually every other department in our company, all of whom came together to make sure this important job was done right. Our thanks to them all.
This has been a difficult time for our viewers and for CBS. I am glad it’s behind us. After a terrific summer of programming, we now all look forward to the new television season. It’s good to be back.
Meanwhile TWC’s Glenn Britt issued a less triumphant statement on behalf of the company:
We’re pleased to be able to restore CBS programming for our customers, and appreciate their patience and loyalty throughout the dispute. As in all of our negotiations, we wanted to hold down costs and retain our ability to deliver a great video experience for our customers. While we certainly didn’t get everything we wanted, ultimately we ended up in a much better place than when we started. We are also encouraged by the 50+ consumer organizations and legislators that supported our call for Congress and the FCC to reassess the 1992 retransmission consent rules. The rules are woefully out of date, are the primary reason cable bills are rising, and too frequently leave our customers without the programming they love. We sincerely hope that policymakers heed that call and take action to prevent these unfortunate blackouts soon.
PREVIOUS, 2:15 PM: BREAKING: Time Warner Cable and CBS have settled the ongoing cable war that began August 2 and led to a network blackout of CBS and Showtime channels for TWC subscribers. CBS, Showtime, CBS Sports and Smithsonian Channel will be reinstated to Time Warner subscribers in NY, LA, and Dallas (CBS) and nationwide (Showtime) by 3 PM PT today, the companies just announced. With the NFL season and U.S. Open semis/finals looming a resolution seemed to be on the horizon as recently as Friday.
Here’s how the battle started last month: The lockout began August 2nd when negotiations over the price TWC pays for CBS services collapsed. An analyst projected early on that CBS would lose $400,000 a day. CBS immediately blocked online programming for subscribers to TWC’s broadband service, barring them from seeing full episodes of TV shows normally available on CBS.com. Both sides began airing ads trumpeting their take on events and jabbing at each other in the press. Four days into the lockout, TWC floated a deal in which it would offer CBS stations on an a la carte basis. But CBS hit back, calling the proposal “a sham”. A day later, CEO Leslie Moonves called the move “grandstanding”. A week into the blackout, FCC Acting Chairwoman Clyburn issued the vague threat that she was “ready to consider appropriate action” if the sides didn’t reach an agreement. But nothing came of the jawboning, as Medley Global Advisors’ Jeffrey Silva had predicted later that day. “Lawmakers tend to think twice before getting into a scrap with broadcasters, finding their presence in Washington and their home states/districts a potential existential threat,” he said.
The parties resumed talks on August 8 amid claims by CBS EVP Martin Franks that TWC was trying to “hamstring our ability to do business with Netflix, Amazon, Hulu Plus and other new entrants that pose a new competitive threat to their former, cozy, unchallenged monopoly status.” The cabler quickly denied that, saying, “Both our expired and proposed agreements with CBS place no restriction on their ability to sell all of their product to Netflix, Amazon, Intel or any other entity, or continue to give all of their best content away for free online, as they have to date.”
DirecTV rooted for the pay-TV provider, while Disney CEO Bob Iger publicly sided for CBS. Meanwhile, customer discontent began to boil over. On August 14, three TWC subscribers in LA filed a class action suit against the company, seeking reimbursement for fees charged during the blackout and claiming unjust enrichment, breach of contract and more. Despite the limited potential audience, CBS continued to win some nights in the ratings.
The companies appeared to play nice for a day when they agreed on August 21 to lift the blackout on WCBS New York just long enough for the channel to air the long-scheduled candidate debates in municipal elections. But the goodwill didn’t last: That same day, TWC announced it would offer a free preview of the Tennis Channel in blacked-out markets so subscribers could watch its U.S. Open coverage. (CBS has exclusive rights to the men’s and women’s semifinals and finals and the mixed doubles final.) A day later, CBS scored a PR victory when it reached a swift retrans deal with Verizon FiOS in three of the blacked out markets — New York, Los Angeles and Dallas – offering free antennas so customers can pick up the network. In a memo to staffers, CEO Leslie Moonves took a swipe at TWC as he laid the blame entirely on the cabler. “You should know that Time Warner Cable has been offered almost exactly the same deal for CBS carriage to which Verizon has agreed,” he wrote.
Going into the long holiday weekend, positive signs began to appear that the parties might be nearing a deal, and TWC subscribers can rest easy after the Labor Day peace accord. The backlash started long ago; now it’s time to gauge fallout.