Time Warner Cable’s decision to drop CBS in New York, Los Angeles, Dallas, Boston, Pittsburgh, Chicago and Denver after the two failed to reach an agreement over retransmission fees has caused some push back already from The Tiffany Network. CBS says it will bar people who subscribe to TWC’s broadband service from seeing full episodes of TV shows normally available on CBS.com: “As soon as CBS is restored on Time Warner Cable systems in affected markets, that content will be accessible again,” spokesman Dana McClintock was reported as saying.
TWC responded by saying the network has “utter lack of regard for consumers, including our high-speed data only customers…Since CBS enjoys the privilege of using public owned airwaves to deliver their programming – they should not be allowed to abuse that privilege.”
The battle with CBS, one of the industry’s toughest negotiators, represented a “once-in-a-lifetime opportunity to go dark and fight (retransmission) fees,” BTIG analyst Rich Greenfield told CNBC. “Time Warner had to do it,” he said.
CBS is seeking a monthly fee of $2 per subscriber, said RBC Capital Markets analyst David Bank, up from about $1 currently.
“Compared to others who get $1 per (subscriber),” they’ve (CBS) spent four to eight times as much on content,” Bank told CNBC. “We think they’ll prevail.”
Incoming Time Warner Cable CEO, Rob Marcus joined Bloomberg Television’s Betty Liu 8/5 to discuss the latest in the blackout:
Marcus on what the economics are that were originally contractually agreed on:
“Let me start with a couple of background items. Our priority here is making CBS programming available to our customers as soon as possible. The key is doing that at a fair price and on reasonable terms. What we have offered today are a couple of choices. We think they are an expeditious way of getting programming back to customers as quick as he can. Choice number one relates to doing a new deal based on the new economics that we just recently agreed to and then other terms that go back to our earlier contracts that just expired last week, with CBS, and the goal is to make absolutely clear we are not looking for any expansion of rights. We are willing to live with the contract we have had for several years now. It is not ideal for Time Warner Cable or its customers, but in the interest of getting the product back to customers, we are willing to do that.”
On what the actual retransmission fee is:
“We will not negotiate the specific price terms. It is not something we ordinarily disclosed.”
On whether they are fighting about digital rights:
“We are negotiating over the overall terms, including fees and other related terms on which we will have access to CBS programming for our customers.”
On offering CBS a la carte:
“Choice number two take the decision out of the negotiating room where we have to debate the value of CBS content to customers, whether all customers should be forced to buy that 51 to buy any other video products. It gives the customer the choice. Having CBS makes the product available on an a la carte basis, lets them name the price, and then we will ensure every customer dollar that goes to CBS programming is remitted to CBS, we will stay out of it, and customers can decide if they want the product. We want customers to decide whether or not they subscribe to CBS content”
On whether he has heard back from Les Moonves”
“No, we have not. We just wrote this afternoon. We have not heard anything since last Friday when the contract expired.”
On whether there is a drop dead deadline:
“Our principal focus is getting CBS programming back on the air as soon as possible That is the primary objective we are after. We are about connecting customers with the entertainment they love. We will not give up, we cannot give up.”
On whether he is afraid of losing customers:
“No, we are urging customers to go get the over the air products for free, signing up for Aereo, and that is how they want to get content. Before this dispute began, we were encouraging them to go to cbs.com. Unfortunately, CBS has taken what I would consider an unprecedented step, which is to block our internet customers, whether or not they are video customers from all CBS product, even if it is not on cbs.com. that includes customers who actually get video from DirecTV or one of our other competitors. It also includes competitors to access CBS content through an affiliate not owned by the CBS Corporation.”
On the rumors of Time Warner cable being combined with Charter:
“What Glen said was that interest by John Malone in the cable industry, and more specifically in Time Warner Cable, is a validation of the value and assets of our business model. I would agree with that. As far as the M&A speculation, I said to you before and I’d say it again, we are guided by a single principle, maximizing value for our shareholders.”
On whether he has been approached again:
“I will not confirm that we were approached previously or again.”
RBR-TVBR observation: Rumor has it that more Time Warner Internet customers in other markets have been blocked from accessing full episodes on cbs.com, not just the markets that were dropped. This blocking of access to content based on ISP could generate its own set of legal actions.