CBS and Time Warner Cable continue to negotiate as deadline looms

With hours to go before their current contract expires, top executives from CBS and Time Warner Cable are trying to hammer out a new distribution deal that would prevent millions of people in New York, Los Angeles and elsewhere from losing access to the most-watched broadcast network.

The two sides -- each hunkered down in their New York headquarters trading emails and phone calls -- remain far apart on financial terms, people at both companies say. Besides CBS-owned TV stations including KCBS-TV Los Angeles, other networks that will come off of Time Warner Cable systems if an agreement or short-term extension isn't signed include cable channels Showtime and the CBS Sports Network. The channels could come off as early as 6 a.m. Thursday.

The contract dispute only covers TV stations owned by CBS, not every CBS affiliate. Although Time Warner Cable has about 12 million subscribers around the nation, the number of its customers that could be affected by this spat is just over 3 million, primarily in New York, Los Angeles and Dallas.

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However, those are three of the nation's biggest TV markets. If CBS is off of Time Warner Cable for a prolonged period, its ratings could take a hit.

Neither CBS nor Time Warner Cable will discuss their specific differences of opinion. CBS and its chief executive, Leslie Moonves, have been outspoken about wanting to dramatically increase the fees it gets from pay-TV distributors such as Time Warner Cable.

Currently, CBS gets less than many cable channels that have smaller ratings, including TNT and Disney Channel.

Media analyst David Banks of RBC Capital Markets speculated that CBS is looking to increase the fee Time Warner Cable currently pays from under $1.00 per-subscriber, per-month to a figure approaching $2.00 per-subscriber, per-month in the first year and with subsequent increases in later years. That is higher than what CBS was initially believed to be seeking.

A Time Warner Cable spokeswoman said the company is "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."

Not only can the two sides not agree on price, they are also having problems coming to terms on the length of any extension of the current contract. With football season looming, CBS does not want to provide any long-term extension through the end of the year because it wants the leverage of NFL games as a bargaining chip.

Time Warner Cable meanwhile is hinting that if the CBS signals come down, the network may lose its coveted channel two position on the cable operator's dial.


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Follow Joe Flint on Twitter @JBFlint.


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