CBS Deal Ends Time Warner Cable Blackout Ahead of NFL Regular Season

Time Warner Cable Asks Feds to Reassess the Rules

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CBS Corp. programs returned to Time Warner Cable in New York, Los Angeles and Dallas after the companies ended a one-month blackout in time for the start of National Football League regular-season games.

Time Warner Cable agreed to pay a significant increase for the right to transmit CBS signals, though still below $2 per subscriber per month, according to people with knowledge of the situation, who asked not to be identified because the terms are private.

'Under the Dome'
'Under the Dome' Credit: CBS

The accord ends a stalemate that left more than 3 million Time Warner Cable subscribers without access to shows ranging from "Under the Dome" to U.S. Open tennis. CBS and other TV networks are demanding higher fees for over-the-air signals and looking for new ways to sell digital rights. That's squeezing pay-TV carriers like Time Warner Cable while they grapple with competition ranging from Verizon's Fios to web-based services like Netflix.

It's "hard to believe this isn't a CBS victory," Richard Greenfield, co-head of equity research with BTIG, said in an e-mail.

Time Warner Cable will resume carrying local CBS stations and channels such as Smithsonian, CBS Sports and Showtime on its systems, according to a statement today. The companies didn't announce terms of the deal, which also covers Showtime Anytime and video-on-demand for stations in New York, Los Angeles and Dallas.

Mobile rights
Aside from Showtime Anytime, which allows subscribers to view the premium channel anywhere on tablets and mobile phones, Time Warner Cable failed to obtain out-of-home rights to CBS's programming, the people said. CBS may later try to sell those rights exclusively to an online player like Google or Apple, they said.

"While we certainly didn't get everything we wanted, ultimately we ended up in a much better place than when we started," Time Warner Cable CEO,Glenn Britt said in a statement.

Mr. Britt called on Congress and the U.S Federal Communications Commission, which got involved in resolving the dispute, to reassess the 1992 retransmission consent rules that allow broadcasters such as CBS to charge cable companies for signals that are delivered free over government-owned airwaves.

"The rules are woefully out of date, are the primary reason cable bills are rising, and too frequently leave our customers without the programming they love," Mr. Britt said.

CBS retains flexibility in selling its content to new web-based providers, CBS CEO Leslie Moonves said in a memo to employees.

"We are receiving fair compensation for CBS content and we also have the ability to monetize our content going forward on all the new, developing platforms that are right now transforming the way people watch television," Mr. Moonves said.

'Not sustainable'
While the FCC didn't take action this time, the dispute may have planted the seeds for an update of the rules, Mr. Greenfield said.

"The disequilibrium that currently exists is not sustainable," Mr. Greenfield said. "We expect change."

The dispute touched on a number of issues that may influence future negotiations between programmers and distributors. Mr. Britt said in a public letter to CBS that the network could offer its channels with a la carte pricing, a proposal that Mr. Moonves called a "public relations gesture."

Time Warner Cable also encouraged customers to sign up for Aereo's online service, which gives users access to broadcast networks over the Internet for $8 per month with the first month free. CBS is suing Aereo for copyright infringement.

The dispute also revolved around mobile rights. CBS agreed to a three-year extension of its contract with Verizon Fios on Aug. 23 in a deal that didn't expand Fios's ability to show CBS in and out of the home. Time Warner Cable initially sought more access to CBS's mobile rights.

~ Bloomberg News ~

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