Time Warner Cable, CBS Imbroglio Snares SVOD13 Aug, 2013 By: Erik Gruenwedel
Retransmission fees spat finds both parties trading accusations over Internet streaming rights
What began as a disagreement over fees paid by Time Warner Cable to broadcast local CBS stations has escalated to online content access, in addition to threats of government intervention and an ongoing blackout of the network’s programming in Dallas, New York and Los Angeles on the nation’s No. 2 cable operator, affecting about 3 million households.
In a new twist, CBS reportedly believes TWC seeks to negotiate terms that the network claims would hinder it from licensing content to subscription video-on-demand services such as Netflix, Hulu Plus, Redbox Instant by Verizon and Amazon Prime Instant Video, among others.
Time Warner Cable’s license with CBS, which expired in June, had enabled the cable operator to free online access to select programming. CBS (and to a lesser degree, Showtime Networks) has been a slow entrant to licensing content to SVOD platforms due to concerns about undermining existing ad-supported and syndication agreements.
That mindset changed last year as Netflix and Amazon increased their content spend exponentially, including the latter striking an exclusive pay-TV right to CBS summer replacement series “Under the Dome,” a ratings hit.
With TWC shedding more than 550,000 video subscribers in its most recent fiscal period, scuttlebutt suggests the cable operator seeks online access to CBS programming to retain or lure subscribers through its own TV Everywhere alternative to SVOD.
"Cord cutting used to be an urban myth. It isn't anymore. The numbers aren't huge but they are statistically significant," wrote Craig Moffett, an analyst with Moffett Research, in a recent note.
Regardless, the quarterly video sub losses expanded to more than 1 million when including Comcast and Cablevision — slightly more than the number of new Netflix subscribers in its most recent fiscal period.
“Perhaps [TWC’s] aim here is to use those outdated terms to hamstring our ability to do business with Netflix, Amazon, Hulu Plus and other new entrants that pose a new competitive threat to their former, cozy,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," CBS executive Martin Franks told Reuters.
TWC denies it wants CBS content for less than market value, or that it is thwarting the network’s SVOD deals. It contends CBS is making select programming unavailable to third-party digital channels not named Amazon and Netflix.
“Somebody has been going around falsely telling media, other figures that we are asking CBS not to sell its programming to new potential competitors such as Netflix, Intel or Sony. That’s just not true,” TWC president and COO Rob Marcus said in a statement.
He added that customers who currently pay Time Warner Cable for Showtime or TMC should expect to see a credit for those channels in an upcoming bill.