The battle of the wills, and money, continued during the night as Time Warner Cable Inc. (NYSE: TWC) nearly took CBS Corp. (NYSE: CBS) off the air by blacking out its programs on the cable network. The battle between the two has, at its heart, what compensation cable companies will get from networks to distribute their content. The fight between programmers and cable companies has gone on for more than two years now as, in sequence, the contracts for the networks come up and the cable companies use their leverage to get higher carriage fees. So far, blackouts by the cable companies have been rare. When they have occurred, the interruption was short as content companies have relented.
Economically, and from the standpoint of negotiating power, it would appear that the cable companies have the upper hand. They can cut programs at will, if they believe that their economic interests have not been served. However, content providers do have the ability to turn to the viewing public to state their cases. Under these circumstances, cable companies can become besieged by unhappy subscribers. The subscribers, in turn, can cancel service. And subscribers do have alternatives, particularly with satellite companies.
CNBC had conversations with the parties at CBS and Time Warner, and it reported that their disagreements may be settled, although each side has continued to boast that it has an advantage over the other.
Time Warner Cable reversed its decision to take CBS network off the air in New York and other cities, after initially announcing a blackout when the two sides failed to reach an agreement on fees.
“There’s progress being made and hopefully we don’t go dark,” CBS CEO Leslie Moonves told reporters in Los Angeles.
“We still believe our content is worth a lot of money,” he added
If there is a resolution, it is likely to come in the next few days. Time Warner is anxious to show that it can force CBS to accept its terms. This becomes more important as time passes, because eventually it will create a precedent for the cable firm’s negotiations with other networks.
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