Time Warner Cable Inc. is threatening to drop CBS from its position as the first broadcast station on its TV menu as a deadline to conclude negotiations nears.
The second-largest U.S. cable provider is talking to several competitors about taking CBS's place if the deadline passes and CBS goes dark in New York, Los Angeles and Dallas, said Maureen Huff, a Time Warner Cable spokeswoman.
CBS, the highest-rated broadcast network, said it won't give up the real estate. The slot is one of the first viewers see when they turn on a cable box and search the menu.
"CBS obviously won't make any deals that require us to change our channel position," said Dana McClintock, a spokesman for CBS.
On the broadcast dial, CBS has occupied channel 2 in New York since 1941 and in Los Angeles since 1951, according to Rich Greenfield, an analyst at BTIG. Both WCBS and KCBS use a CBS2 on-air logo. Time Warner Cable is threatening to "auction off the most valuable channel real estate in the television business in the two largest advertising markets in the U.S.," he said.
The 1992 U.S. Cable Television Consumer Protection and Competition Act set rules for broadcast stations, allowing them to guarantee carriage from cable providers as long as they didn't demand compensation. But broadcast networks have negotiated billions of dollars in fees from pay-TV providers in recent years in exchange for their programming.
"It looks more and more likely that our customers are going to have to endure another blackout," Ms. Huff said. "Channel 2 is CBS's must-carry position. But when they elect retransmission consent, they no longer have any right to any particular position on our lineup."
The threat is an attempt to put pressure on CBS to lower the amount of money it wants for giving access to its owned-and-operated affiliate networks in New York, Los Angeles and Dallas. It earlier said it would encourage subscribers to use Aereo, the streaming-TV service the networks want to sue out of existence, to watch CBS if the dispute leads to a blackout.
Time Warner Cable claims CBS asked for prices 600% higher than the network's affiliates in other markets receive for the same programming. About 3 million of Time Warner Cable's 12 million total video subscribers would lose CBS if a blackout occurs.
The Wall Street Journal reported Time Warner Cable's threat over the Channel 2 slot earlier today.
"Even if we were to go dark with CBS, we would still work toward an agreement," Ms. Huff said. "But CBS could potentially appear on a different channel number when we reached an agreement."
~ Bloomberg News ~