UPDATED with additional company statements and details. CBS stations in more than a dozen markets, including New York and Los Angeles, have gone dark on AT&T’s DirecTV satellite systems, DirecTV Now internet-delivered bundles and U-verse cable systems.
The dispute went public earlier this week, with the usual exchange of harshly worded statements.
The carriage contract between the CBS stations and AT&T-owned satellite giant DirecTV, DirecTV Now and U-verse cable systems officially expired Friday at 11 PM PT. Affected markets include New York, LA, Chicago, Philadelphia, Dallas, San Francisco, Boston, Atlanta, Tampa, Seattle, Detroit, Minneapolis, Miami, Denver, Sacramento, Pittsburgh and Baltimore and 117 CBS stations and affiliates on DirecTV Now. In addition, CBS Sports Network has gone dark nationally from DirecTV and DirecTV Now, and Smithsonian Channel is down on DirecTV.
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The fight comes at the same time that dozens of local stations owned by Nexstar are also at an impasse with AT&T, leaving those stations dark for nearly three weeks. Last March, AT&T reached an 11th-hour settlement with Viacom to avoid a blackout.
“This is just the latest example in AT&T’s long and clear track record of letting its consumers pay the price for its aggressive tactics to get programmers to accept below market terms,” CBS said in a statement in the overnight hours. “While we continue to negotiate in good faith and hope that AT&T agrees to fair terms soon, this loss of CBS programming could last a long time.”
AT&T responded with its own version of events. “CBS is a repeat blackout offender,” it said in a statement. “CBS continues to demand unprecedented increases even as CBS advances content on CBS All Access instead of on its local broadcast stations. CBS has said publicly that it priced All Access much higher to capitalize on customers it can capture from cable, satellite or other means of distribution. In short, CBS is seeking to convert a free, publicly subsidized broadcast station into a high-cost channel while leaving cable and satellite customers holding the bag.”
Programming on CBS at this point in the calendar is hardly setting viewership records, but the longtime leading broadcaster in terms of total viewers remains a powerhouse, especially during football season. NFL and SEC college games return in early September.
In a lengthy statement Friday morning, AT&T said it has “offered to pay CBS an unprecedented rate increase and the highest fee we currently pay to any major broadcast network group. CBS has refused.”
It further claimed that CBS was refusing to allow AT&T to offer CBS All Access, the subscription streaming service, in the manner that Amazon, Apple and Roku do. The telecom giant therefore concluded that CBS was trying to “upsell” pay-TV consumers, forcing them to pay $6 or $10 a month for All Access for either the limited-advertising or no-advertising version.
Earlier this week, CBS said AT&T had proposed “unfair terms” that were “well below those agreed to by its competitors.”
The expiring contract ran for seven years, an eternity by today’s fast-evolving pay-TV standards. In 2012, when that deal would have begun, millions more customers were paying for traditional bundled TV packages and stand-alone streaming services barely existed.
Further complicating the picture for AT&T is its $81 billion acquisition of Time Warner, which closed in mid-2018 and left the company with $170 billion in long-term debt at the end of last year. AT&T has methodically been cutting costs and eliminating large chunks of that debt, with executives promising to return to normal debt levels within the next two to three years. AT&T will report its quarterly earnings on July 24.
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