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.