"There is a very real threat that Time Warner Cable is going to drop our stations in New York, Los Angeles and Dallas," Moonves wrote in a memo to CBS staffers obtained by the Los Angeles Times.
At issue are fees CBS is seeking from Time Warner Cable to carry its TV stations. The debate only involves TV stations owned by CBS and not all CBS affiliates. Still, that could translate to several million viewers in three key markets and could harm CBS' ratings.
"As you can imagine, we don’t take this situation lightly," Moonves said.
In the memo, Moonves argues that many cable networks that have smaller ratings than CBS are getting more in monthly subscription fees from Time Warner Cable and that the pay-TV distributor is being cheap.
"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," the memo said. "According to its own billing statements, it is already charging its subscribers more than $20 a month for broadcast programming."
In the memo, Moonves also tries to use Time Warner Cable Chief Executive Glenn Britt's words against him. Britt recently remarked that Time Warner Cable would start considering dropping cable networks that do not deliver high ratings.
"We obviously agree with Mr. Britt, because at CBS we carry our own weight," he said.
Neither Time Warner Cable nor CBS has disclosed the specifics of the contract dispute. People familiar with the matter indicate that CBS is seeking a significant increase. The network is currently said to get around 50 cents per subscriber, per month from Time Warner Cable. A new deal would likely start at around $1 per subscriber and increase over the length of the deal. That is similar to what cable networks such as TNT and Fox News get and far less than what ESPN receives.
"CBS is not even in the top 10 recipients of the programming fees paid out by Time Warner Cable," Moonves said.
A Time Warner Cable spokeswoman said the company was willing to pay for CBS and had "offered them significant fees." However, she added, "their current demands don’t represent a good value for our customers."
Fee disputes such as these are common in the industry and rarely result in a signal being removed. Both sides, however, have launched ad campaigns critical of the other.
It remains to be seen if the pay channel Showtime, which is owned by CBS, will also be affected by the dispute. Both sides have declined to comment on that subject.ALSO:
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