This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Time Warner Cable's CBS Blackout Deadline Moves to Thursday Morning

NEW YORK ( TheStreet) -- Time Warner Cable (TWC - Get Report) may remove CBS (CBS - Get Report) programming from subscribers in New York, Los Angeles and Dallas by Thursday morning if the two companies fail to agree on a new re-transmission contract.

With a potential CBS blackout looming in those cities, shares of Time Warner rose 1.1% to close at $117.29 while CBS slipped 0.2% to end the trading day at $52.47.

CBS CEO Leslie Moonves, in a memo to company employees obtained by TheStreet, said that Time Warner Cable is refusing to pay the New York-based network a "fair rate" to compensate the company for the cost of producing broadcast shows such as "The Big Bang Theory" and "NCIS." The contract applies only to CBS-owned local television stations in those three cities and smaller areas in other regions where Time Warner Cable has subscribers.

"It's not like Time Warner Cable doesn't have the money," Moonves wrote in the memo. "Cable is a very, very profitable business, and Time Warner Cable can certainly afford to pay CBS a fair rate for our programming without passing any added cost on to its customers."

Moonves added that CBS is paid less than "many cable networks" for its programming even though its shows are among the most popular on television.

The companies' five-year re-transmission agreement expired on June 30, and was extended to July 25 at 9 a.m. New York time to avoid conflict with the rating monitoring scheduled of local stations, a process known as "sweeps."

Time Warner Cable spokeswoman Maureen Huff in a phone interview countered that CBS is making exorbitant demands when compared to fees the cable-TV provider pays CBS-affiliated station owners elsewhere in the country.

"We have offered CBS an increase in their fees," Huff said. "We agree that there is value to their programming but we believe that their demands are not fair to our customers."

CBS has been able to successfully extract higher re-transmission fees from pay-TV affiliates, having generated 62% more revenue in the first quarter from its cable and satellite operators than during the same period a year earlier.

Huff emphasized that viewership is just one factor that the company considers when determining re-trasmission fees. Another is availability and the uniqueness of the programming. CBS programming, Huff said, can also be accessed through the network's Web site in addition to over-the-air transmission with the use of an antennae.

"We don't make any programming decision solely on ratings," Huff said. "It's important to note with CBS that they're a broadcaster and their programming is free over-the-air, their prime-time lineup is free online, and so our customers have other ways of getting this programming."

To that point, Huff said, Time Warner Cable plans to tell its subscribers that CBS programming can also be viewed through Aereo, the upstart online television service that repackages those same free over-the-air signals to subscribers for a fee of $8 to $12 per month.

Aereo, which networks such as CBS have unsuccessfully sought to pay them for their programming, is currently available in New York, Boston and Atlanta with plans to expand to 18 other cities. Broadcasters are suing Aereo, charging that the company is stealing their signal for profit; Aereo counters that it is merely providing viewers a convenient means to access free over-the-air television programming.

The talks between CBS and Time Warner Cable are said to be ongoing yet a blackout of CBS programming in New York, Los Angeles and Dallas could take place on Thursday morning.

"If on Thursday our content has been pulled off their service, you'll know that we are in the midst of a crucial struggle we intend to bring to a satisfactory conclusion," said Moonves in his memo to company employees.

Written by Leon Lazaroff in New York

>To contact the writer of this article, click here: LeonLazaroff.>.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CBS $43.00 0.28%
TWC $179.24 0.02%
AAPL $93.65 -0.66%
FB $101.93 0.92%
GOOG $681.92 -0.32%


Chart of I:DJI
DOW 15,660.18 -254.56 -1.60%
S&P 500 1,829.08 -22.78 -1.23%
NASDAQ 4,266.8370 -16.7550 -0.39%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs