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TWC, CBS Fan Retransmission Flames

Break out the rabbit ears, folks. CBS Corp. and Time Warner Cable Inc. are escalating their fight over content licensing fees, and TWC subscribers in major media markets -- including Los Angeles, New York City, and Dallas -- could end up losing cable access to CBS shows as a result.

Negotiations between Time Warner and CBS have dragged on for weeks, with the initial deadline for a deal falling at the end of June. The two companies extended talks into July, but tensions have ratcheted up as the weeks roll by. In an official press statement Thursday night, Time Warner Cable blasted "CBS's demand for a 600 percent premium" on licensing fees as "unprecedented."

For context, the LA Times reports that Time Warner Cable currently pays CBS less than $1 per subscriber each month for content. However, CBS believes it deserves far more than that amount because of the popularity of its programming. The network has even launched a website, keepcbs.com, to urge viewers to lobby Time Warner Cable to renew its contract.

Such nasty retransmission fights are still relatively new for broadcast companies. While cable channels have relied on a dual revenue model of advertising dollars and retransmission fees for years, broadcasters have only recently turned to retrans fees as a source of meaningful income.

In the most recent CBS financial earnings report, the company stated quarterly earnings of US$519 million from combined retransmission and affiliate fees. The company didn't break that number down, but last year CBS President and CEO Les Moonves called $250 million a conservative estimate for quarterly retransmission revenue. (See CBS Financials Fuel Aereo Angst.)

Meanwhile, the latest fight between Time Warner Cable and CBS underscores what's at stake in the ongoing legal battles with Aereo Inc. as well. If Aereo's unique system for bypassing retransmission fees ultimately stands up in court, broadcasters could face losing hundreds of millions of dollars in licensing revenue. (See Free TV Model Under Threat.)

— Mari Silbey, Special to Light Reading Cable
albreznick 7/22/2013 | 2:44:47 PM
re: TWC, CBS Fan Retransmission Flames After dissing it for decades, the broadcasters now lust after the cable dual-revenue model because ad revenues ain't what they used to be. But does that mean cable operators have to oblige them? No, but they will probably end up doing so because, in the end, they don't really want to cut off valuable TV programming from their customers and take the blame for it. So MSOs will likely wind up paying higher and higher retrans fees over time.
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