Time Warner Cable and CBS reach distribution deal

After a monthlong blackout, Time Warner Cable and CBS Corp. struck a distribution deal that returned the broadcast network’s programming to millions of frustrated subscribers in Los Angeles, New York and Dallas.

The agreement came after weeks of bitter negotiations and public posturing by the two companies. With the fall television season weeks away and the National Football League set to return later this week, both CBS and Time Warner Cable had incentives to get a new contract signed.

There was also increasing heat from local and national lawmakers and regulators. The Los Angeles City Council had scheduled a hearing for Tuesday to push both sides to come to an accord. The Federal Communications Commission also had urged the two sides to make peace.

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“I am pleased CBS and Time Warner Cable have resolved their retransmission consent negotiations, which for too long have deprived millions of consumers of access to CBS programming,” said acting FCC Chairwoman Mignon Clyburn. “At the end of the day, media companies should accept shared responsibility for putting their audience’s interests above other interests and do all they can to avoid these kinds of disputes in the future.”

Although terms of the new distribution contract were not revealed, CBS Chief Executive Leslie Moonves said in an internal memo that the deal delivers to us “all the value and terms that we sought in these discussions.”

Time Warner Cable Chief Executive Glenn Britt said in a statement that while the cable operator “didn’t get everything we wanted, ultimately we ended up in a much better place than when we started.”

Britt went on to ask lawmakers to revisit the 1992 Cable Act that cleared the way for broadcast networks such as CBS to seek financial compensation from pay-TV distributors such as Time Warner Cable.

“The rules are woefully out of date, are the primary reason cable bills are rising, and too frequently leave our customers without the programming they love. We sincerely hope that policymakers heed that call and take action to prevent these unfortunate blackouts soon,” Britt said.

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At issue in the negotiations were both fees CBS wanted Time Warner Cable to pay to carry its local TV stations as well as how CBS sells its programming to other content providers in the digital space such as Netflix and Amazon.

CBS was seeking a long-term pact that would see the subscriber fee Time Warner Cable pays to carry its local stations grow substantially. While neither side ever disclosed specifics, industry analysts and media insiders put the price tag Time Warner Cable was paying at about 80 cents per-subscriber, per-month. CBS wanted a deal that would see those fees increase to the $2 dollar range over the life of the contract.

Time Warner Cable wanted limits on how and where CBS could sell its content. That proved to be a far bigger sticking point than the financial terms.

In his memo to CBS staff, Moonves said the network has the “ability to monetize our content going forward on all the new, developing platforms that are right now transforming the way people watch television.”

The breakthrough came after the two sides negotiated through the Labor Day weekend, the unofficial end of summer. Advertisers pay a premium to be in fall TV shows and popular sporting events such as NFL football. CBS didn’t want to lose viewers and Time Warner Cable didn’t want subscribers to drop them for a competing distribution service.

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This weekend, Time Warner Cable subscribers missed CBS’ coverage of the biggest U.S. tennis tournament of the year, the U.S. Open from Flushing Meadows in New York. Next weekend, CBS is scheduled to televise the semi-finals and finals of the annual tennis tournament.

In Los Angeles, Time Warner Cable customers, unless they installed a digital antenna, were forced to go without KCBS Channel 2 and KCAL Channel 9. They missed nine Los Angeles Dodgers games broadcast by KCAL as the Dodgers attempt to slug their way into the Major League Baseball playoffs.

Dallas Cowboy football fans in Texas, who have Time Warner Cable service, have been shut of preseason action for their favorite team. In New York, Jets games were also grounded.

Other CBS viewers were upset over missing “Judge Judy,” “60 Minutes,” and CBS’ hit summer series, “Under the Dome.”

Time Warner Cable provides television service to more than 1 million households or about a third of the homes in Los Angeles County. An estimated 80% of all cable subscribers in the region have Time Warner Cable service.

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