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Cable Technology Feature Article

April 10, 2013

Would You Subscribe To CBS?

By Steve Anderson, Contributing TMCnet Writer

A new and somewhat disturbing trend has emerged, with Leslie Moonves, the CEO of CBS, not only applauding recent remarks from Fox's chief operating officer Chase Carey, but also suggesting that CBS may well follow suit, taking CBS to a cable-only service. But as dire as such implications would seem for normal viewers, they may not be as wide-reaching as the remarks would imply.

Moonves' remarks followed those of Chase Carey, suggesting that CBS might well choose to cut off broadcast service, at least in the New York and Connecticut area, following a recent court decision in favor of Aereo, an Internet television company that was rebroadcasting signals from broadcast networks. Aereo uses a series of tiny antennas to pick up the over-the-air feeds from the networks, and then streams the resulting content online, allowing access to those networks that can't be reached in other ways.

The networks demanded a preliminary injunction against Aereo before it could even launch last summer, but courts denied the injunction, saying that "the balance of hardships" wasn't "decidedly" tilting in favor of broadcasters. While broadcasters believed that retransmission fees were necessary, Aereo asserted that the customers owned the individual antennas receiving the broadcast content that was being streamed, thus no fees were necessary.

This leads us to Moonves' remarks, in which he told the New York Times that he, "wholeheartedly supported what Chase said," and that the network had already been talking to cable providers about going off the air, essentially turning the formerly free network into a subscription service. However, Moonves emphasized that, for now, such talk was limited to the New York and Connecticut areas. Aereo's operations are primarily in metropolitan New York, but it has plans to reach over 20 different cities by the end of the year.

Of particular note here are Carey’s remarks to the National Association of Broadcasters during its trade show in Las Vegas. Carey asserted that not only did networks require the retransmission fee revenue to survive, but they also required the advertising dollars to survive.

This whole concept leads to several noteworthy implications. While right now, the networks seem to be talking about going cable-only in very limited areas, it's entirely possible that they could consider it elsewhere. This would be especially hard-hitting in places like the Midwest, where many users look to antenna-based television with network service as their primary source of news and entertainment. Throw in the growing contingents of television rebellion--the cable cutters who have left cable behind, the cable nevers, who have never had a cable subscription to begin with, and the zero TV crowd that doesn't even use an antenna but sticks strictly to online video sources--and it becomes clear that network television does need to make some kind of change to remain viable in a rapidly changing landscape.

That being said, making a move to cable-especially outside of major metropolitan areas-is a very risky move for networks. How many viewers would such a move cost the networks? If it's any kind of substantial number, that means a sock in the pocketbook as reduced viewer numbers mean reduced appeal to advertisers. Reduced appeal to advertisers means death under Carey's model.

The end result here will take plenty of time to filter out, but it could very well mean big changes afoot in the way everyone in the United States watches television.

Edited by Stefania Viscusi

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