CBS, Time Warner head into Week 2 of standoff
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| LOS ANGELES
As the Time Warner feud with CBS drags on 鈥 now in its seventh day, with many predicting weeks more 鈥 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.
Since last Friday night, 3.5 million viewers in New York, Dallas, and Los Angeles have been cut off from their favorite CBS shows 鈥 from 鈥淏ig Bang Theory鈥 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.
鈥淐BS 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,鈥 Time Warner Cable wrote in an on-screen notice to subscribers
CBS responded that Time Warner Cable鈥檚 response was 鈥渋ll-advised.鈥
鈥淲hat 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,鈥 CBS said in a statement. 鈥淲e will not accept less.鈥
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.
鈥淲e should expect to see more blackouts. This is a reflection of the changing economics of broadcast TV,鈥 says Mark Tatge, author of 鈥淭he New York Times Reader: Business and Economics.鈥 He says cable companies don't want to pay retransmission fees owed to broadcasters for programs that聽were once distributed free over analog airwaves.
Changes in technology will lead to these fees being eliminated, he says. 鈥淲hat 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.
鈥淭his 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,鈥 says Jeff McCall, professor of communication at DePauw University in Greencastle, Ind.
鈥淭his 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.
Still others say that the dispute will open up the industry in ways consumers have never seen, possibly shining a light into the practice of bundling, by which cable companies mandate that subscribers take multiple channels many never watch, just so they can get the ones they do. It may also open the Pandora鈥檚 box of scattering viewers to new technologies in ways that won鈥檛 be reversed.
That could happen sooner rather than later, for instance, if disgruntled viewers take Time Warner's suggestion to look into Aereo, a recently begun New York-based company that streams TV signals onto the Internet, after picking them up free over the air. Time Warner has also suggested that CBS be offered on an 脿 la carte basis to customers 鈥 a proposal CBS dismisses as an "empty gesture" if it is the only channel offered this way.
Support for the 脿 la carte approach is growing, however.
Sen. John McCain (R) of Arizona and Sen. Richard Blumenthal (D) of Connecticut recently introduced legislation that leans on cable and satellite TV providers to allow their customers to pick and choose the channels they pay for. Senator McCain says the legislation would bring down monthly cable bills by allowing consumers to opt out of the dozens or even hundreds of channels that they don't watch.
鈥淎ll kinds of things are bound to happen when you create a rising tide of consumer dissatisfaction,鈥 says Paul Levinson, author of 鈥淣ew New Media.鈥 鈥淭his is going to further weaken the conventional cable and network model."
The Parents Television Council has applauded McCain鈥檚 idea.
鈥淚f the cable industry won鈥檛 allow a free market to exist, then we hope the McCain-Blumenthal legislation will provide consumers with a remedy,鈥 they said in a statement.鈥
But opponents of the 脿 la carte approach note that a survival-of-the-fittest approach to cable offerings will produce a much smaller menu of choices for consumers, as the less-watched channels are dropped.
Many feel the dispute may go on longer, because TV schedules are in the dog days of August. But most say that once the NFL season begins on Sept. 5, both sides will get serious and find a solution. Meanwhile, consumers who have taken the opportunity to explore other options may well have put in motion the cord-cutting momentum that will remake the TV landscape.
鈥淭he CBS-Time Warner fight over distribution fees is only a symptom of a much larger problem boiling up in the TV industry,鈥 says avowed cord-cutter Mark Buff, president of over-the-air HDTV antenna provider Mohu. Traditional cable and satellite TV have reached a tipping point, he says. 鈥淚t has become far too expensive for content providers and consumers, so both are rebelling,鈥 he adds.
In the 鈥渕assive transformation鈥 that will overtake the TV industry in coming years, he says, the winners will be the ones that are inexpensive, create open platforms which allow any content source (online and traditional TV) to be viewed on TVs, and are the simplest to use.
The one thing holding most people back from moving to these new services is how complex they are for the average consumer to set up and use, Buff says. 鈥淎pple TV is a great example. I believe all of these new providers are destined to fail unless they figure out how to make their services as easy to use as the traditional 鈥淐hannel Up, Channel Down,鈥 interface, which has endured for the past 50 years."
"The simplicity of that experience is powerful and lasting, and the providers that get this are the ones that will win," he adds.