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CBS, Time Warner head into Week 2 of standoff

CBS, Time Warner blackout: It's not just about profit. The dispute could drive consumers to new options that risk changing the face of television.

By Daniel B. Wood and Gloria GoodaleStaff writers / August 8, 2013

This image provided by CBS shows a CBS advertisement in New York's Times Square on Aug. 2. Three million Time Warner Cable customers in New York, Los Angeles, and Dallas lost access to CBS programming in a fee dispute Friday. The nation's second largest cable operator said that CBS refused to have productive negotiations, which were repeatedly extended after their previous deal expired at the end of June.

Courtesy of CBS/AP

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As the Time Warner feud with CBS drags on – now in its seventh day, with many predicting weeks more – many TV industry watchers say the dispute could signal huge changes in how and what viewers are able to watch on the tube for years to come.

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Since last Friday night, 3.5 million viewers in New York, Dallas, and Los Angeles have been cut off from their favorite CBS shows – from “Big Bang Theory” to Tiger Woods winning the Bridgestone Invitational. This has followed the breakdown in negotiations between CBS and Time Warner over the fees cable and satellite companies pay broadcasters for the right to carry their channels. CBS reportedly wants double what it is now getting.

“CBS has demanded an outrageous increase for programming that CBS delivers free over the air and online, requiring us to remove their stations from your lineup while we continue to negotiate for fair and reasonable terms,” Time Warner Cable wrote in an on-screen notice to subscribers

CBS responded that Time Warner Cable’s response was “ill-advised.”

“What CBS seeks, and what we always have sought from the beginning, is fair compensation for the most-watched television network with the most popular content in the world,” CBS said in a statement. “We will not accept less.”

Analysts say that even as viewers find the dispute distasteful, they should get used to more of the same, because nothing less than the future of television is at stake.

“We should expect to see more blackouts. This is a reflection of the changing economics of broadcast TV,” says Mark Tatge, author of “The New York Times Reader: Business and Economics.” He says cable companies don't want to pay retransmission fees owed to broadcasters for programs that were once distributed free over analog airwaves.

Changes in technology will lead to these fees being eliminated, he says. “What has happened to newspapers is going to happen to local and network TV. Network TV is next. The networks have increasingly become dependent on retransmission fees as a source of revenue as the cable systems have gotten the ad business."

Other analysts say TV consumers are caught in the middle and are being reminded of the profit motives driving the industry. Watch for cable bills to go up, at least in the short term, they say.

“This is a crass reminder that the media business is all about the dollars and the corporations have trouble negotiating sensible deals that keep money flowing for both,” says Jeff McCall, professor of communication at DePauw University in Greencastle, Ind.

“This is the kind of dispute that threatens to kill the golden goose, because it hurts the images of both parties and upsets consumers who just want their programs," he aadds.

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