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Tuesday, September 3, 2013

CBS And Time Warner End Dispute, Blackout Ends

Advertisers now have the ability to target their TV ads to specific households, based on customer data. (AP/Ann Heisenfelt)

(AP/Ann Heisenfelt)

CBS and Time Warner ended their public contract dispute yesterday, marking a nearly one-month blackout in eight major markets.

The agreement restored the CBS network and affiliated channels such as Showtime.

While the two sides didn’t release details of the agreement, CBS did win a significant increase in re-transmission fees for its content, as well as a large segment of control in its digital future.

Jason Bellini Explains The Dispute Between CBS And Time Warner

Guest

Transcript

JEREMY HOBSON, HOST:

From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW.

And NFL fans can rest easy. Your football is back.

(SOUNDBITE OF MUSIC)

HOBSON: Yesterday, marked the end of the disagreement between CBS and Time Warner. A clash that resulted in a one-month blackout of CBS programming and related channels like Showtime and TMZ for Time Warner customers. After a very publicly dispute, the companies came to an agreement regarding retransmission payments just in time for the start of football season.

And here to explain why those things are connected is Jason Bellini of The Wall Street Journal. Jason, it sounds like this had a lot more to do with football than cable.

JASON BELLINI: Well, Jeremy, that dramatic music that you played from football was very appropriate. NFL games are one of the most watched programs on TV. And the first CBS football telecast this Sunday is going to happen. The month-long blackout is over. It means about three million Time Warner subscribers that have missed coverage of the U.S. Open on CBS, they're going to be able to watch their sports.

HOBSON: And bring us back to the heart of this dispute. Time Warner had said that CBS was asking for prices that were 600 percent higher than other affiliates were receiving, and it sounds like CBS came out ahead here.

BELLINI: Well, you know, this is a public disagreement that focused on retransmission fees that you just described. And that's become a frequent sticking point in negotiations between pay-TV providers and the broadcasters. It used to be that the networks, the local affiliates, they would be retransmitted for free over cable, but that changed in the '90s. And now, these companies have to - Time Warner, like the other cable providers, have to pay these retransmissions fees. But they're trying to push back because the price keeps going up higher and higher and higher.

For a TV station, retransmission fees have now become such an important piece of their financial health that range between 52 percent and 76 percent of their inflow. So that was really what this is about, was, you know, these titans, just trying to figure out how to work with one another when the cable companies say, we just can't keep paying this much. But they haven't disclosed how much they actually agreed upon.

HOBSON: And it's interesting that it was sports that brought this to a close because the network that gets the most money from the cable providers is ESPN. But there have been, Jason Bellini, blackouts over retransmission fees in past years, why was this one so different?

BELLINI: Well, this has been the longest dispute between a pay-TV operator and a network. And it really also highlights the growing the tensions that are happening right now, especially when there's decline in subscriptions in the cable industry. That's what's been adding to the tension here. Cord cutters are saying that people are bucking at the fees, and it's eventually going to really hurt their business.

There's a study that predicts this via convergence. It predicts that this year, 4.7 million households are going to drop their cable TV subscriptions. The most important reason being, the cost is just too expensive for many families. It's cutting too far into their budgets. In 2012, only about a million household that cut the cord. So these are really frightening numbers for the cable TV industry, so they see it as a matter of having to save themselves by pushing back against these costs.

HOBSON: Yeah, it does make you wonder whether this is a sign of things to come or simply the last gasp of a sinking ship here, of the cable, as people switch over to other options, Jason.

BELLINI: Well, you know, this is also about digital rights because, you know, Time Warner was hoping that they'd be able to continue doing what they had been able to do in - since their 2008 contract, which is to retransmit on demand CBS programming. But CBS said, no, no, no, we're not going to do that anymore. There's going to be licensing fees that are going to be associated with that, and we're going to be selling our product to Netflix and to Amazon. So in this changing world, they're trying to jockey as well for what - it may not just be cable that is a source of important revenue for them.

HOBSON: Jason Bellini of The Wall Street Journal, thanks as always.

BELLINI: Thank you.

HOBSON: And still to come, we will talk about the reopening of California's Bay Bridge. That's next. HERE AND NOW. Transcript provided by NPR, Copyright NPR.


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