Financial details of the pact were not released. But a memo to CBS staffers from Eye chief Leslie Moonves indicated that CBS prevailed in one of the major sticking points in the talks, namely the Eye's ability to strike domestic SVOD deals for CBS and Showtime content.
"The final agreements with Time Warner Cable deliver to us all the value and terms that we sought in these discussions," Moonves wrote. "We are receiving fair compensation for CBS content and we also have the ability to monetize our content going forward on all the new, developing platforms that are right now transforming the way people watch television."
TW Cable chief Glenn Britt maintained that the cable operator had been able to temper CBS' financial demands in the negotiations.
"As in all of our negotiations, we wanted to hold down costs and retain our ability to deliver a great video experience for our customers," Britt said. "While we certainly didn't get everything we wanted, ultimately we ended up in a much better place than when we started."
The Labor Day accord brings to an end the longest blackout for a Big Four O&O group stations in major markets in the 20 years since the FCC's retransmission consent rules mandated that cable operators negotiate with station owners for carrying local signals.
Showtime and CBS' other cable assets also became leverage points in the retrans talks with TW Cable, as is common in retrans talks for diversified media congloms.
The blackout of the Eye's O&O stations affected about 3 million TW Cable subscribers in New York, Los Angeles, Dallas and other major markets. The loss of Showtime, Smithsonian Channel, and CBS Sports Network was system-wide across TW Cable's 11.9 million subscribers and some Bright House Network subs, which TW Cable manages. Showtime is said to benefit significantly from the new pact, which also brings expanded distribution for Smithsonian and CBS Sports Network.
TW Cable, in turn, gets expanded VOD rights for Showtime and CBS programming.
Industry observers expected the sides to reach an agreement by this week in preparation for the formal start of the NFL season. As always, CBS' carriage of AFC football games was a key leverage point in the talks. Sources said CBS' coverage of the U.S. Open tennis tournament, which heads into its final rounds this week, was also a pressure point, particularly in the Gotham market where TW Cable is the dominant cable provider.
The saber-rattliing on the deal began more than two months ago, as the initial July deadline for a deal approached. Both sides employed the now-familiar weapons in a carriage agreement, with dueling PSAs, newspaper and radio ads making the case to consumers why the other side was being unreasonable.
CBS, like other broadcasters, insisted that it should be paid sub fees commensurate with top cable networks because the Eye ranks among the most-watched channels on TW Cable's lineup. TW Cable accused the Eye of holding viewers hostage while it sought triple-digit fee hikes.
Retrans wrangles that spill over into the public eye have become more commonplace in recent years as major station owners began demanding significant cash in retrans deals. The globa financial meltdown of the 2008-2009 period walloped the local TV advertising market, which spurred the largest station group owners to focus on alternate sources of revenue.
Negotiations between CBS and TW Cable execs continued pretty steadily throughout the long blackout. The final details were sewn up during the holiday weekend in a flurry of conference calls and email exchanges, sources said.
Moonves in his memo cited Eye chief operating officer Joe Ianniello and CBS TV Distribution prexy Ray Hopkins as the drivers of the dealmaking. TW Cable is in the midst of a management shuffle as Britt is retiring at year's end. His successor, Rob Marcus, played the role of closer as the sides zeroed in on an agreement late last week.
Britt in his statement continued his call for the FCC to overhaul its retrans rule, arguing that it gives broadcast TV station owners too much leverage to pull signals in negotiations.
"We are also encouraged by the 50+ consumer organizations and legislators that supported our call for Congress and the FCC to reassess the 1992 retransmission consent rules," Britt said. "The rules are woefully out of date, are the primary reason cable bills are rising, and too frequently leave our customers without the programming they love. We sincerely hope that policymakers heed that call and take action to prevent these unfortunate blackouts soon."
Acting FCC chairwoman Mignon Clyburn avoided wading into the dispute, even as it dragged on. At present, the FCC has little authority to intervene into private business negotiations.
"At the end of the day, media companies should accept shared responsibility for putting their audience's interests above other interests and do all they can to avoid these kinds of disputes in the future," Clyburn said in a statement Monday.
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