On Friday both CBS and Time Warner Cable confirmed that they are back at the negotiating table to hammer out a dispute that's caused more than 3 million subscribers to be without the network's programming in addition to Showtime, The Movie Channel, Flix and the Smithsonian Channel. Unfortunately, there seems to be no end to the blackout in sight.
The argument, it seems, is over online content. On Thursday Martin Franks, an executive vice president at CBS, told a New York City Council hearing that negotiations with Time Warner Cable have "gone badly off course". He accused the cable company of trying to negotiate terms that would limit CBS' ability to do business with Amazon, Hulu and Netflix.
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Even more, he claims that Time Warner is insisting on securing the same terms and conditions of their last agreement which was signed in 2008 and expired in June. That would mean some of CBS' content would be supplied to Time Warner for free whereas other companies like Netflix would be required millions of dollars to distribute the same content.
"Perhaps their real aim here is to use those outdated terms to hamstring our ability to do business with Netflix, Amazon, Hulu Plus and other new entrants that pose a new competitive threat to their former, cozy,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," Franks said. However CBS has no plans to become Time Warner's accomplice in trying to throttle those competing streaming services, he added.
Naturally there are two sides to every coin. Time Warner called those comments "erroneous", that the expired and proposed agreements do not restrict CBS from selling rights to Netflix, Amazon and other parties. They also don't restrict CBS from distributing content for free online through CBS' website or mobile apps.
The bickering thus continued to go back and forth. CBS claims that Time Warner wants the broadcaster to either sever its ties with companies like Netflix and Hulu Plus in the digital space, or it wants all online content handed over for free. Time Warner claims that it's willing to pay more for the same rights it had in the old agreement, but that CBS is "countering by taking some of those rights away and charging more and we don't think it's right for customers to pay more while getting less."
While the bickering continues, Time Warner customers in the affected areas will likely miss their dose of the PGA Championship on Sunday. Meanwhile, Moffett Research analyst Craig Moffett predicts that cord cutting – the act of cancelling a cable subscription in favor of Netflix and Hulu Plus – are on the rise. Around 898,000 U.S. households have dropped their cable subscription in the past 12 months, up from 455,000 households the previous year.
Time Warner customers frustrated over the whole CBS blackout still won't have access to their favorite shows if they decide to cut the cord, at least, not outside paid services like Netflix and Hulu Plus. All Time Warner customers are unable to stream content from the CBS website or through the network's mobile apps. Those residing outside the "blackout" areas also can't access on-demand content even though CBS network content still airs on their TV.
By blacking out CBS, Time Warner has essentially raised its subscription rate, forcing customers to pay the same for less given that content has been locked out both offline and online. The company is reportedly offering pro-rated rates to customers who are subscribing to the premium channels like Showtime and The Movie Channel, and replacing them with Starz Kids and Family.
