Time Warner, CBS draw viewers into fee spat

Time Warner, CBS draw viewers into spat over fees as blackout continues

Associated Press

NEW YORK (AP) -- CBS and Time Warner Cable can't work out their differences, so they want viewers to help settle the fight.

Three million Time Warner Cable customers in New York, Los Angeles, Dallas and other cities remained without access to CBS for a third day on Sunday, after the cable provider dropped the network in a spat over fees.

The blackout meant affected customers weren't able to watch Tiger Woods win the Bridgestone Invitational on their home screens, or shows including "60 Minutes." Also at stake was preseason National Football League coverage starting next week.

The two sides couldn't agree on the status of their talks either, with CBS saying on Sunday that no negotiations were taking place. A Time Warner representative, Maureen Huff, maintained that, "Talks continue."

In the meantime, the two New York-based companies have been taking their cases to the public, with full-page print ads.

A CBS ad on Sunday, for example, showed a TV screen with shots of the shows people wouldn't be able to watch, including "The Big Bang Theory" and "Big Brother."

"Call Time Warner Cable now," the ad urged. "Tell them you want your CBS 2 back!"

Time Warner Cable customers who turned to CBS this weekend were greeted by a message on white screen saying the network had made "outrageous demands" for fees. It advised viewers that they could still see their favorite shows through several ways, including "using an antenna to get CBS free over the air."

Although CBS sends its signal out over the airwaves for free to anyone with an antenna, about 85 percent of CBS viewers watch TV through a pay TV provider.

Time Warner cut off CBS for viewers in select markets on Friday, saying the network is demanding retransmission fees that are out of line with what it pays other broadcasters. CBS said it had asked the cable provider to continue negotiating while its programming was still on the air. But it said Time Warner rejected the request.

"We remain ready to negotiate in good faith when they are," the network in a statement Sunday.

CBS says it's never been dropped by a cable provider before and that it has successfully negotiated deals with other providers including AT&T, Cablevision, Comcast, DirecTV and Verizon.

CBS is trying to gain revenue from retransmission fees as a buffer against swings in advertising revenue. Analysts say earning revenue from pay TV subscribers is crucial to the network's growth prospects.

Time Warner, meanwhile, says giving in to demands for higher fees would result in skyrocketing bills for customers. DirecTV came to the defense of its competitor, saying it applauded Time Warner for "fighting back against exorbitant programming cost increases."

Time Warner is trying to hold down costs as it fights to keep subscribers. In the most recent quarter, it lost 191,000 cable TV subscribers, ending with 11.7 million at the end of June.

Both companies nevertheless posted healthy quarterly earnings this week. Time Warner Cable Inc. grew its net income 6 percent to $481 million, as revenue rose 3 percent to $5.55 billion. CBS Corp. grew net income 11 percent to $472 million on stronger revenue.

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