CBS and Time Warner Cable Settle Dispute -- So Who Won? NY Times, Reuters
CBS and Time Warner Cable have ended their contract dispute, with the broadcaster not only securing a higher fee for its content, but also retaining digital rights, reports Bill Carter in The New York Times.
While the companies didn't disclose financial terms of the deal, both sides indicated that the deal swung in CBS's financial favor, Carter writes. The agreement meant that CBS and its related networks, such as Showtime, returned to Time Warner Cable systems in New York, Los Angeles and Dallas, along with a number of smaller markets, following a monthlong blackout.
The deal was struck just before this week's launch of the National Football League regular season, with CBS set to air key games.
In a statement, CBS Chief Executive Leslie Moonves said: "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."
Reuters reports: "CBS was asking for as much as $2 a month in 'retransmission fees' to allow Time Warner to carry the CBS network and other channels for each of its 3.2 million cable subscribers in the affected areas. That would be a large hike from the current CBS monthly fee of around 56 cents a subscriber, although any increase would be phased in over the life of the contract."
Time Warner Cable Chairman Glenn Britt said in a statement: "We wanted to hold down costs and retain our ability to deliver a great video experience to our customers. While we certainly didn't get everything we wanted, ultimately we ended up in a much better place than when we started."
The Reuters report quotes cable and telecommunications analyst Craig Moffett of Moffett Research saying: "CBS is the winner. Content owners always win these negotiations -- it's just a matter of how much they won. They have all the leverage. Consumers don't get mad and trade in their channel when these fights drag on. They go looking for a different satellite or telephone company."
Reuters adds: "The agreement will almost certainly continue to reduce Time Warner Cable's margins, which have narrowed for the past decade as program costs have increased faster than operator's ability to raise rates, said Michael Corty, an analyst with Morningstar who follows Time Warner Cable."
Corty notes: "The video margins are still substantial, but cable operators are having to make it up more and more from broadband sales."
The two sides said in a statement that programming returned on all systems at 6 p.m. ET Monday.