Friday, July 19, 2013

CBS, Inc and Time Warner Cable Clash Over Retransmission Fees

Time Warner Cable's current license fee agreement with CBS, Inc. expires June 30 and cable customers might find themselves without CBS and its owned cable networks two weeks from now.  "At issue is TWC’s right to carry the CBS television network and affiliated local stations including those in New York, Los Angeles, and Dallas-Ft. Worth (where TWC is the dominant local cable system operator), as well as the Showtime suite of networks, the Smithsonian Channel, CBS Sports Network and the former TV Guide Network, now called TVGN. CBS acquired a 50 percent stake in TVGN earlier this year (the other half is owned by Lionsgate) and acts as its operator.  The big hammer in these negotiations is CBS Sports, where NFL games are set to air starting in September."
Essentially, CBS wants more for their content and TWC wants to pay less. 

TWC hasn't been the first to have acrimonious negotiations with a broadcaster and they won't be the last.  Each time these agreements begin to expire, posturing begin and we as consumers are faced with ads criticizing the other for lack of good faith.  Here is the latest example:

One thing is clear, at some point, now or months later, these two sides will settle.  But what if Time Warner Cable decides to follow the model that Aereo has designed, building farms of mini antennas to capture the CBS broadcast signal and deliver to the consumer. It doesn't answer the problem of the the other cable networks at risk of being dropped but it does lower the cost of operations.  Perhaps a financial model is due to determine what savings might come by converting to the Aereo type model.  If significant, it could lead to a different balance of power.   Of course building farms if antennas would take a good deal of time and resources and consumers would still be without the content for a period of time.  That could lead to more drops of service before such a plan could be put in place. 

Of course these negotiations are more complicated then just right of access to programming.  "These deals also include other multi-platform aspects such as video-on-demand rights and TV Everywhere distribution rights."  Especially with VOD, Aereo can't offer this content.  But the amount of increase, whether a few pennies or dollars, add up quickly and are ultimately passed through to the consumer.  And it is the increased costs of cable service that continues to push consumers to services like Aereo and other OTT options like Netflix and Amazon