CBS and Time Warner Cable's Smear Campaigns Could Backfire

CBS and Time Warner Cable are each asking the public to take their side in a nasty carriage dispute that could black out the network in several major markets, the latest in a series of PR battles over the fees programmers charge pay-TV companies. But these kinds of appeals may be growing futile -- or worse. "Running these ads side-by-side, really just cancel each other out," according to one pay-TV carrier. "It aggravates consumers. They don't really trust either side on these sorts of things." Every new spat already tempts regulators and politicians to play hero. New York City Comptroller and mayoral candidate John Liu last week told CBS and Time Warner Cable to make peace "immediately" and promised to seek customer refunds if service is interrupted. The latest deadline for the parties to strike a new deal is 5 p.m. today. "It is a mistake to engage in public arguments," said Brian Wieser, an analyst at Pivotal Research. "Highlighting a dispute to consumers, which will ultimately result in their paying millions of dollars of incremental costs for video services, creates incremental risks around the prospects of unfavorable regulatory policies in the future. In other words, they both risk 'killing the goose that lays the golden egg.'" And now the fights may increasingly remind consumers about growing lower-cost alternatives. Time Warner Cable is trying to use Aereo, the service that lets subscribers stream and record broadcast TV over the web, as leverage in the battle, saying it will recommend the service to customers if CBS goes dark. CBS, along with other broadcast networks, is currently suing to shut Aereo down, claiming the platform infringes on its copyrights. The decision to run a campaign over carriage negotiations isn't taken lightly by either the networks or carriers, and is typically a last-ditch effort to call attention to the situation. There are many negotiations that take place that are never heard about in the media. But it can be hard to remain silent as deadlines near. "We feel a responsibility to our viewers and our business to communicate the fact that our channels may get dropped," one TV programmer said. The economics are complicated and most consumers don't understand what's behind the negotiations, so ad campaigns are a way to help viewers comprehend each side's position and put pricing into context, the person added. Once private negotiations become a PR battle, though, things often get ugly. That's been the case with CBS and Time Warner Cable. CBS has been airing a series of TV spots in New York, Los Angeles and Dallas during popular series like "Big Brother" and "Under the Dome," telling viewers that their cable company could make them miss out. "What's worse than being evicted from the 'Big Brother' house?" CBS asks. "How about Time Warner Cable evicting 'Big Brother' from your house?" In its attack, CBS claims that Time Warner Cable refuses to negotiate the same type of deal that other cable, satellite and telco companies have struck with the network, and notes that while Time Warner has dropped nearly 50 channels in the last five years, CBS have never been dropped by a cable company before. The broadcaster has also rolled out a print campaign and introduced a website at KeepCBS.com. Its effort asks viewers to tell Time Warner Cable that they don't want to lose CBS -- which would, in theory at least, strengthen the network's ability to get higher fees from the cable company. In response, Time Warner Cable is airing commercials accusing CBS of giving New York a "black eye" and claiming CBS is asking them to pay 600% more than what they pay in other markets. Time Warner Cable is also publicly threatening to remove CBS from its prized No. 2 spot on the channel guide. In this case, PR strategists said CBS has the upper hand with viewers, even if its rate hikes would ultimately be show up on cable bills. "Time Warner Cable is not known for being consumer-friendly," said Ronn Torossian, founder of 5W Public Relations. "So attacking Time Warner is not exactly like attacking the church. Blaming Time Warner will resonate with the consumer whether CBS is right or wrong." More carriage battles may go public as the industry hits an inflection point. With new distribution models, negotiations are not only including the rights to what viewers see on the traditional TV screen but also digital content. There are also new platforms like Netflix and Hulu threatening the cable model, making the stakes higher than ever. "I don't think it is unusual in ugly battles like this to take an aggressive tactic," Mr. Torossian said. "There's so much money at stake it isn't surprising they are using the consumer to get the deal done." Last year AMC Networks launched a multi-pronged advertising campaign against Dish Network after the satellite operator dropped AMC's suite of channels. The campaign included the "Hey Dish, Where's My AMC?" promotion, which called on Dish subscribers to create videos detailing what they miss about AMC's networks. The winner received $4,000 in cash, a Canon camera and a private meeting with AMC executives. That followed a publicity stunt where actors playing "Walking Dead" zombies invaded the streets of New York to raise awareness about the dispute. Ultimately, after a three month blackout, AMC Networks were restored to Dish. Viacom similarly urged viewers to take a stand against DirecTV when it stopped carrying the programmer's 26 channels in July 2012. The parent of MTV, VH1 and Nickelodeon rolled out a parody of DirecTV's normal TV spots that outlined the bad things that happen when DirecTV drops its networks. The companies reached an agreement after a nine-day blackout. But as public negotiations become more commonplace, consumers may become frustrated and less likely to take either side, networks, carriers and observers agree. "You do risk alienating people and both sides get hurt," Mr. Torossian said. And forget about playing upon viewers' sympathy. "Viewers know that whatever the outcome inevitably their cable bill is going to go up one way or another," said Craig Aaron, president at Free Press, an advocacy group that argues against media consolidation. "Consumers feels helpless in these disputes and don't understand the terms or the numbers."

CBS and Time Warner Cable's Smear Campaigns Could Backfire

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