CBS and Time Warner Cable take distribution feud public

CBS and Time Warner Cable are taking their business battle public, with each launching ad campaigns critical of the other.

At issue is a new distribution deal for media properties owned by CBS including its local TV stations around the country. The two sides have been trying to negotiate a contract but talks reached an impasse Thursday afternoon. If a new agreement or an extension isn’t agreed upon, CBS-owned TV stations could come off Time Warner Cable systems as early as July 24.

The potential blackout applies only to Time Warner Cable markets where CBS owns the local TV stations such as Los Angeles, New York City and Dallas, which translates to millions of viewers.

In a statement, CBS said that Time Warner Cable “won’t negotiate the same sort of a deal that all other cable, satellite and telco companies have struck.” CBS also noted that it has never been dropped by a pay-TV distributor before but that Time Warner Cable has “dropped nearly 50 channels in the last five years.”

CBS said its request for an extension to continue negotiating was rejected by Time Warner Cable, which countered that it would consider an extension but would rather keep talking until the current agreement expires.

In addition to running spots about the feud on its TV stations including KCBS-TV Los Angeles, CBS will also take out print and radio advertisements as well. Besides alerting viewers about the possibility that CBS may go dark on Time Warner Cable, the network will also promote rival distributors as an option to the cable company.

Time Warner Cable will launch its own ads on its cable systems and elsewhere trying to convince subscribers that CBS is being greedy.

“CBS is driving up the cost of cable TV – charging higher and higher prices for shows they give away for free online and over the air,” one Time Warner Cable ad says.

It has been many years since Time Warner Cable and CBS negotiated a distribution deal. The price the cable operator is paying now for the CBS stations is well under $1 per subscriber, per month, a person familiar with the matter said.

CBS has made no secret that it wants hefty increases for access to its content. CBS is the most-watched network and also has rights to major sports including the National Football League. Chief Executive Leslie Moonves has often argued that CBS should be getting more than popular cable channels. TNT, for example, gets over $1 per subscriber, per month, according to industry consulting firm SNL Kagan.

Time Warner Cable charged that CBS is demanding a 600% premium for its content.

“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,” the company said in a statement.

Such feuds between programmers and distributors have become commonplace in the television industry. Networks are seek higher fees from distribution companies to help combat their own rising costs. Still, it is rare that channels are dropped.
Time Warner Cable has been as vocal about programming costs skyrocketing out of control, but it too owns some expensive channels including SportsNet in Los Angeles, which carries the Lakers.

If the CBS signals do come off, both sides may get criticism from lawmakers and regulators. The Federal Communications Commission, however, has typically refused to intervene in these skirmishes.

CBS is not the only network Time Warner Cable subscribers could lose. The company also owns the pay-TV channel Showtime. A CBS insider said Time Warner Cable could continue to carry Showtime. However, the cable operator may choose to drop it in retribution for not being able to strike a pact for the network.

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Follow Joe Flint on Twitter @JBFlint.