Media titan CBS blasted a proposal from Time Warner Cable to resolve the ongoing CBS blackout in the nation’s top media markets as a “sham,” as the two sides seemed to dig in for an extended battle.
For a fifth straight day, millions of cable viewers remained without CBS, the highest-rated broadcast network in the country. CBS is home to popular programming such as “The Big Bang Theory,” “Big Brother,” “NCIS,” “60 Minutes,” and, come fall, NFL football.
On Friday night, Time Warner Cable, the nation’s second-largest cable company, yanked CBS programming from its customers after the breakdown of negotiations between the corporate giants over so-called retransmission rights, which cable and satellite companies pay to broadcasters to carry their channels. According to published reports, CBS had been asking for an increase from Time Warner Cable of about 100%, to $2 per subscriber from $1. By comparison, ESPN commands more than $5 per subscriber, according to industry estimates. (Time Warner Cable was spun off as an independent public company from TIME parent Time Warner in 2009.)
On Monday afternoon, however, Time Warner Cable seemed to lay out a path through the impasse. In a letter to CBS chief Les Moonves, Time Warner Cable CEO Glenn Britt proposed that CBS could return to Time Warner Cable customers on an a la carte basis. That would mean that individual cable subscribers could choose to buy CBS programming for an additional cost on top of their normal cable package fees. Britt said such an arrangement would “allow customers to decide for themselves how much value they ascribe to CBS programming.”
This suggestion shocked many industry observers, because a la carte pricing has long been the bête noire of the cable industry. Giving consumers the ability to pick and choose channels would undermine the entire cable industry business model, which has long been based on selling bundles of channels to subscribers. By raising the specter of a la carte pricing, Time Warner Cable was essentially calling the CBS price increase a bluff — and then increasing the bet. In effect, Time Warner Cable is saying to CBS: “You think your programming is worth twice what we’ve been paying? Well, let’s let the consumers decide.”
In a strongly worded response, CBS turned around and accused Time Warner Cable of bluffing. “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,” CBS said in a statement emailed to TIME. “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.”
Retransmission consent fees have become substantial sources of revenue for broadcasters, and have led to financial disputes between broadcasters and cable and satellite providers. CBS, under president and CEO Les Moonves, has been particularly aggressive in retransmission fee negotiations. As the talks deteriorated leading up to Time Warner Cable’s blackout of CBS, Moonves declared, “We’re at war with Time Warner Cable.”
On Friday, CBS also blocked Time Warner Cable customers from CBS.com. That decision alarmed public interest groups. “CBS, by blocking all Time Warner Cable broadband subscribers in every market, regardless of whether or not they subscribe to Time Warner Cable’s video services, has crossed the line from hardball tactics to outright abuse of consumers,” said Harold Feld, senior vice president at D.C.-based consumer watchdog Public Knowledge.