Time Warner and CBS end dispute, restore ‘Under the Dome’ to N.Y., Los Angeles, Dallas

CBS and Time Warner Cable have resolved a dispute that kept shows including “Under the Dome” and “NCIS” off of millions of television screens in several cities for a month. The two companies reached a new agreement on the fees Time Warner will pay CBS for the right to retransmit the broadcaster’s programming over cable. Time Warner subscribers in New York, Dallas and Los Angeles were able to watch CBS again Monday for the first time since Aug. 2, just in time for the beginning of football season:

Added pressure was on the two companies to reach an agreement with CBS holding deals to broadcast NFL and Southeastern Conference football, as well as the start of the U.S. Open tennis tournament.

The blackout affected about 1.1 million of New York’s 7.4 million television households that get CBS. An estimated 1.3 million of 5.6 million households in Los Angeles were blacked out, along with 400,000 of Dallas’ 2.6 million TV homes, CBS said. Those are three of the nation’s five most populous television markets.

CBS estimated the blackout cut the network’s national viewership by about 1 percent.

The talks were being closely watched beyond these companies and their customers because of the idea that a retransmission agreement would set a precedent for future negotiations between networks and cable or satellite companies. Another point of contention was the cable operator’s access to CBS material for on-demand or mobile device viewing.

Associated Press

Both companies, along with most of their competitors, are in a difficult position, as more people are watching television through online services. In an interview earlier this year, Time Warner Cable chief executive Glenn Britt discussed the problems confronting the industry:

The traditional model of television — in which broadcasters bundle together hundreds of channels and force cable companies to buy and distribute them to consumers as a package — is under siege.

Fed up by monthly bills that typically reach more than $100, millions of consumers have canceled their cable service and turned to Internet video where they can buy shows one at a time or pay a very low monthly subscription fee. But a major gap of the online content is that it is does not offer live programming, such as sports and local news. . . .

Britt argued the current way most consumers pay for their cable television must change. In the interview, he joined a growing chorus of frustrated cable companies, including Verizon and Cablevision, that have been publicly blaming media companies for the unwieldy cable bundle.

Cable companies have said the technology in set-top boxes can track what consumers are watching most. So they should be able to buy cheaper and smaller packages of channels according to those interests.

“The structure needs more flexibility,” Britt said. A customer should not be required to pay for less popular channels such as VH1 Honors to get Nick Jr. and MTV. “There are fellow citizens who are struggling financially and can’t afford large programming packages. We want the ability to offer those customers smaller, more affordable packages.”

Cecilia Kang

Some CBS viewers in Dallas, Los Angeles and New York responded to the outage by downloading shows illegally:

In a week-to-week comparison of BitTorrent activity, TorrentFreak discovered that pirated downloads of the CBS show “Under the Dome” rose sharply when the blackout began. Before the screens went dark, viewers from blackout regions accounted for 10.9 percent of all U.S. downloads of “Under the Dome”; the Monday after the blackout took effect, that figure jumped 3.7 percentage points to 14.6 percent.

In plain English, online piracy of the show had risen by more than a third where viewers had lost access to CBS. People were still finding ways to access their show even when it had gone off the air.

Brian Fung

Time Warner and CBS did not disclose the terms of the deal.

Max Ehrenfreund is a blogger on the Financial desk and writes for Know More and Wonkblog.
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