Cable Technology Feature Article
CBS Rejects TWC's A La Carte Programming Idea as a Sham
By Tara Seals, TMCnet Contributor
Time Warner (News - Alert) Cable and CBS show no signs of resolving their retransmission fee dispute, which has resulted in a blackout for consumers in eight markets, including the key markets of New York, Dallas-Ft. Worth and Los Angeles. Rhetoric on both sides is ramping up, even as consumers fume.
In the wake of the blackout, CBS has in turn blocked access to full episodes on CBS.com for TWC subscribers.
In an open letter this week, TWC chairman and CEO Glen Britt proposed an immediate restoration of carriage for CBS. His offer was rather unconventional: The deal hinges on CBS giving TWC access to channels on an a la carte basis, so that TWC customers can pick and choose which channels to order. "Rather than our debating the point, we would allow customers to decide for themselves how much value they ascribe to CBS programming," Britt said.
CBS CEO Les Moonves dismissed the suggestion as “grandstanding,” calling the offer “a public relations gesture of some kind.” He added: “After reviewing your letter, we have concluded that there is not a sincere or helpful proposal in it. It is, rather, a well-wrought distraction. Last Friday, in spite of the fact that we had offered a one-week extension to remain on the air while we continued our discussions, you chose to take us off the air… Since that night, Friday at 5 p.m., we have not heard from anybody at Time Warner Cable to discuss anything at all, in spite of your public statements to the contrary. Until, of course, your public letter masquerading as a private one. That's not negotiating.”
Moonves continued, “As to your ground-breaking ‘offer’ to go à la carte: Anyone familiar with the entertainment business knows that this is an empty gesture. The economics and structure of the cable industry have created a certain way that content is distributed and compensated. We both know that a true à la carte universe is not one that Time Warner Cable welcomes,” he argued.
Time Warner said it was "disappointed" by a "lack of responsiveness" from CBS.
"Our efforts to get CBS programming back for our customers are sincere, and we have offered two proposals to accomplish that, while CBS has offered nothing in return," the company said in a statement.
In a show of satellite solidarity, DirecTV (News - Alert) threw its weight behind its business rival. “Just like the characters in CBS’ Under The Dome, all pay TV customers are feeling trapped and helpless as broadcasters expect them to absorb ridiculous rate increases for the exact same programming,” DirecTV said in a statement. Noting that the company has had “its share of these battles” –including a 10-day blackout of Viacom’s (News - Alert) channels last year – DirecTV says it applauds TWC.
The satellite company also attacked CBS’ decision to bar TWC’s Internet customers from watching full episodes of programs on CBS.com. “The conduct of content companies in their efforts to extract outrageous fees from distributors and consumers may have reached a new low,” DirecTV said.
Retransmission fee disputes have become more frequent as content companies continue to ask more and more for carriage rights. TWC, the No. 2 cable operator in the U.S., said that CBS is asking for a 600 percent increase to carry its programming. "We are willing to pay for CBS, and we have offered them significant fees," Time Warner Cable spokeswoman Maureen Huff told CNN Money. "But their current demands don't represent a good value for our customers."
“The programming cost issue isn’t limited to Time Warner and CBS,” Cox’s (News - Alert) Bob Wilson, senior vice president of content acquisitions, told research firm BTIG. “It’s between every video content provider in the programming supply food chain and every video distributor selling programming packages to consumers. The industry has to find a way to work together to address the path we are on with respect to rising content fees, especially for retransmission consent of broadcast stations and sports programming, in a way that responds to consumer needs.”
In the nearly week-long blackout, viewers in the affected markets (accounting for about 3 million TWC subscribers or 25 percent of TWC’s base) have lost popular CBS programming, like the new hit Under the Dome, NCIS and the Big Bang (News - Alert) Theory, along with premium cable network Showtime, the CBS Sports Network and Smithsonian Channel.
Edited by Blaise McNamee