CBS vs. Time Warner Cable: Are you ready for some blackout?

Later this week, CBS O&O’s in New York, LA and Dallas will go likely go dark on Time Warner Cable systems, and there’s a good chance they will stay dark until September. The two have been operating under an extension of their expired retransmission deal but that extension runs out at midnight Wednesday and each has launched a web site aimed at heaping blame for the impasse on the other, suggesting they remain far apart in their negotiations. With the slowest ratings month of the year — August — fast approaching, the incentive for each side to get a deal done will be at its lowest ebb. CBS, at least, is likely to see its maximum moment of leverage in late-September, when the NFL season begins, and ratings for the network spike, and probably won’t be in a hurry to make a deal until then.

September is also likely to be about when Tom Wheeler, President Obama’s pick to head the FCC, takes over at the agency. Though Wheeler looks like a lock for the spot following his hearing before the Senate Commerce Committee, the full Senate is unlikely to move on his confirmation until he appointment can be paired with a Republican nominee for the other open spot on the five-member commission. So far, no name has surfaced for that position, either among the GOP leadership on the Hill, or from the White House, and with time running out before Congress’ August recess it’s unlikely someone could get named and get a hearing scheduled in time.

While the FCC has no authority to intervene directly in retransmission disputes, but the rules governing retransmission consent are among the issues many consumer advocates are trying to tee up for the new chairman. Wheeler was non-committal on the issue at his hearing, as nominees typically are, but what he did say was telling.

“Today, broadcasters are using retransmission consent as a way of developing a new revenue stream where they can get revenue from subscribers through the intermediary of the cable provider,” Wheeler said. “I believe in that kind of evolutionary market. What does bother me, and I think the commission needs to be attuned to, is when consumers are held hostage over corporate disputes.”

Which of course is exactly what’s happening — or is about to happen — in the dispute between CBS and Time Warner Cable. I doubt CBS really wants to be the test case for any formal steps toward reforming retransmission rules by the new chairman so it behooves the network to get the matter settled before Wheeler gets the key to the chairman’s wash room.

In the meantime, Aereo could turn out to be the big winner in the dispute.

 

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Paul Sweeting

Principal Concurrent Media Strategies

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  1. Who do you think is being the most unreasonable? Does Time Warner have more of an advantage because of their large customer base, or does CBS have the advantage due to its ratings? I would imagine that cable subscribers would be more loyal to a network than a cable company. My personal experience with Time Warner leads me to believe that they are the bad guy here, and I wouldn’t consider myself as a consumer being held hostage when I can easily switch to another service provider. Big winners could be Aereo, RCN, and Verizon…

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