Monday, September 2, 2013

Deadline.com: Time Warner Cable, CBS Settle (PREP IN PROGRESS HOLD IN DRAFTS!)

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Time Warner Cable, CBS Settle (PREP IN PROGRESS HOLD IN DRAFTS!)
Sep 2nd 2013, 21:59, by THE DEADLINE TEAM

It’s been a month since Time Warner Cable began blacking out CBS, Showtime and other affiliated stations in New York, Los Angeles, Dallas and elsewhere. But less than a week before CBS starts broadcasting regular-season NFL games, the companies said today they’ve struck a deal for carriage of CBS-owned stations on TWC systems across the country, as well as Showtime Networks, CBS Sports Network and Smithsonian Channel. The blackout was set to end at 3 p.m. PT. Specific terms were not disclosed, but they said the agreement includes retransmission consent, as well as Showtime Anytime and VOD, for CBS stations on TWC systems in New York (WCBS and WLYW), Los Angeles (KCBS and KCAL) and Dallas (KTVT and KTXA.)

The lockout began August 2nd when negotiations over the price TWC pays for CBS services collapsed. An analyst projected early on that CBS would lose $400,000 a day. CBS immediately blocked online programming for people who subscribe to TWC's broadband service, barring them from seeing full episodes of TV shows normally available on CBS.com. The sides began airing ads trumpeting their take on events and jabbing at each other in the press. Four days into the lockout, TWC floated a deal in w la carte basis. CEO Leslie Moonves hit back that “the so-called proposal is a sham, a public relations vehicle designed to distract from the fact that Time Warner Cable is not negotiating in good faith. Anyone familiar with the entertainment business knows that the economics and structure of the cable industry doesn't work that way and isn't likely to for quite some time.” TWC responded: "We're disappointed in their lack of responsiveness, particularly to our request for them to quit unfairly blocking the free content available on CBS.com from our Internet customers.”

Four days into the lockout, TWC floated a deal in which it would offer CBS stations on an a la carte basis. But CBS hit back, calling the proposal “a sham”. A day later, CEO Leslie Moonves called the move “grandstanding”. A week into the blackout, FCC Acting Chairwoman Mignon Clyburn issued a vague threat that she was "ready to consider appropriate action" if the sides didn't reach an agreement. But nothing came of the jawboning, as Medley Global Advisors' Jeffrey Silva had predicted later that day. "Lawmakers," he said, "tend to think twice before getting into a scrap with broadcasters, finding their presence in Washington and their home states/districts a potential existential threat."

The parties resumed talks on August 8 amid claims by CBS EVP Martin Franks that TWC was trying to "hamstring our ability to do business with Netflix, Amazon, Hulu Plus and other new entrants that pose a new competitive threat to their former, cozy, unchallenged monopoly status." The cabler quickly denied that, saying, "Both our expired and proposed agreements with CBS place no restriction on their ability to sell all of their product to Netflix, Amazon, Intel or any other entity, or continue to give all of their best content away for free online, as they have to date."

DirecTV rooted for the pay-TV provider, while Disney CEO Bob Iger publicly sided for CBS. Meanwhile, customer discontent began to boil over. On August 14, three TWC subscribers in LA filed a class action suit against the company, seeking reimbursement for fees charged during the blackout and claiming unjust enrichment, breach of contract and more.

Despite the limited potential audience, CBS continued to win some nights in the ratings.

A couple of weeks ago, the companies appeared to play nice for a day, when they agreed on August 21 to lift the blackout on WCBS New York just long enough for the channel to air the long-scheduled candidate debates in municipal elections. But the goodwill didn't last: That same day, TWC announced it would offer a free preview of the Tennis Channel in the blacked-out markets so subscribers could watch its U.S. Open coverage. (CBS has exclusive rights to the men's and women's semifinals and finals and the mixed doubles final.) A day later, CBS scored a PR victory when it reached a swift retrains deal with Verizon FiOS in three of the blacked out markets — New York, Los Angeles and Dallas – offering free antennas so customers can pick up the network. In a memo to staffers, CEO Leslie Moonves took a swipe at TWC as he laid the blame entirely on the cabler. "You should know that Time Warner Cable has been offered almost exactly the same deal for CBS carriage to which Verizon has agreed," he wrote.

Going into the long holiday weekend, positive signs began to appear that the parties might be nearing a deal, and TWC subscribers can rest easy after the Labor Day peace accord. The backlash started long ago; now it’s time to gauge fallout.

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