The battle between CBS and Time Warner is getting nasty. After four days of a CBS programming blackout in eight markets, the cable company offered a new deal. CBS isn't budging, calling the offer a "sham."
Here's the backstory: CBS's deal with Time Warner expired on June 30. The companies have been negotiating ever since over how much Time Warner would pay the broadcaster to air its programming. CBS complained that the cable company would not "negotiate the same sort of deal that all other cable, satellite and telco companies have struck with CBS."
Time Warner countered that CBS wanted rates that are 600 percent more than other areas of the country. The cable operator noted that, "It's unreasonable to expect our subscribers and Time Warner Cable to pay that price and we are negotiating very hard for a reasonable price."
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Those negotiations have so far failed. Time Warner CEO Glenn Britt has since written a letter to CBS CEO Leslie Moonves suggesting the company would end the blackout if CBS gives a nod to "the new economics TWC reluctantly agreed to" previously. CBS's response didn't pull any punches:
"Today's so-called proposal is a sham, a public relations vehicle designed to distract from the fact that Time Warner Cable is not negotiating in good faith." according to CBS. "Anyone familiar with the entertainment business knows that the economics and structure of the cable industry doesn't work that way and isn't likely to for quite some time. In short, this was an empty gesture from a company that is expert at them."
We asked Jeff Kagan, an independent telecom analyst, about the hubbub. He told us this battle has been brewing for years -- but even though it hurts everyone, it's an important part of the process of reinventing the way we pay for television going forward.
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"No one wants either side to be hurt, that means the investors or the companies, but there are also customers that have to be part of the mix as well, and customers have been hurt over time," Kagan said. "To date the investors have loved the performance, but the customers hated it since they had to pay more year after year. Customers pay roughly double every 10 years."
Kagan noted that the economics of this industry have changed, and competition is growing. He called for the industry to fix its own problems before the U.S. government steps in and settles the issue. One solution Time Warner has offered is an a-la-carte option for programming.
"A la carte may not be where either side really wants to go, but the marketplace has changed and the industry must respond correctly," Kagan said. "It is a good solution being put forward by Time Warner Cable. This lets customers choose the channels they want to watch and pay less in total. Either that or competitive threats like the satellite television companies and new companies like Aereo will step in and really be the big winners here."
Posted: 2013-08-07 @ 12:59pm PT
i hate that Raycom TV in the Charleston,SC area has blacked out local Channel 5. we have been dealing with Dish satellite for over 16 years (we were some of the first customers)an now on social security. quite frankly this situation stinks and Direct TV may get new customers for TVs new season starting in September
Posted: 2013-08-07 @ 12:02pm PT
Sick of it and will be canceling with TWC