CBS boss Moonves says Time Warner Cable can afford to compensate CBS fairly without passing the cost on to customers
The retransmission standoff between CBS and Time Warner Cable took a couple of new turns on Tuesday, with the deadline to avoid a possible blackout extended by a day, even as the rhetoric heats up, with CBS Corporation president and CEO Leslie Moonves blasting TWC's compensation rates.
The previous deadline of Wednesday has been moved to 9 a.m. ET Thursday — though the extension isn't a reflection of a breakthrough in negotiations but rather an FCC rule barring cable operators from dropping a network during sweeps periods.
If it comes, the blackout would affect 3.5 million homes — roughly 29 percent of Time Warner Cable's video subscriptions.
In an internal memo obtained by TheWrap on Tuesday, Moonves blasts TWC's "aggressive approach" and says that CBS is compensated at a lower rate than less-watched channels. TWC could increase CBS's compensation without passing on costs to the consumer via a "current market" deal, he asserts.
Meanwhile, a spokesman for Time Warner Cable told TheWrap that it has offered CBS significant fees, but "their current demands don't represent a good value for our customers."
Said Moonves in his memo: "At the heart of this debate is the way in which Time Warner Cable compensates CBS for the programming we provide its subscribers. CBS programs are among the most popular in the industry, and yet there are many cable networks — with considerably less viewership — that receive more money for their programming from Time Warner Cable than we do. In fact, CBS is not even in the top 10 recipients of the programming fees paid out by Time Warner Cable."
That, he said means that "networks that are watched by audiences much smaller than that of our lowest-rated shows are receiving much more compensation than the network that provides viewers with 'The NFL on CBS,' 'The Big Bang Theory,' 'NCIS' and '60 Minutes.' Clearly something is out of whack."
Saying that CBS "will continue to be both reasonable and resolute in our talks" with Time Warner Cable, Moonves added that Time Warner can well afford to boost CBS's compensation without passing on the cost to the subscribers.
"It's not like Time Warner Cable doesn't have the money. 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 wrote.
Time Warner Cable counters that its compensation rates are based on "a variety of factors."
"Every decision we make on programming is based on a variety of factors, including unique content, cost and popularity. We are constantly engaged in making our lineup the best value we can for our customers," a Time Warner Cable spokesperson told TheWrap. "We are willing to pay for CBS, and we have offered them significant fees. But their current demands don't represent a good value for our customers. Nevertheless, we'll continue to negotiate, and hope to reach an agreement before the expiration."
TWC added that it's not alone in trying to balance costs.
"We're not the only ones — everyone is having these problems. The truth is literally every other distributor, whether cable, satellite, or telco, has acknowledged the problems created by programmers' rising costs and there have been well-publicized disputes this year and last involving cable/satellite/telco distributors and both national cable networks and local broadcast stations."