How Much Money Are Time-Warner and CBS Actually Fighting About?


Towards the end of July, a curious ad began popping up on Time-Warner Cable stations in New York. “CBS is giving New York a big black eye,” read the on-screen text, “demanding an outrageous price for WCBS-TV.” Yes, in what may be the finest real-life example of the old saying about the pot and the kettle, Time-Warner Cable is livid over a company overcharging for television service. That’s their turf! And thus began the Great TWC/CBS War of 2013, now lumbering into its second month, with the cable company blacking out CBS affiliates and Showtime for over three million customers in New York, Los Angeles, Dallas, Boston, Chicago, Denver, Pittsburgh, and Detroit. Earlier this week, Time framed the battle as “the end of TV as we know it,” and that’s not just click-baiting headline hyperbole. Cable subscribers are already cutting cords with the enthusiasm of new dads in the delivery room; what they’re overpaying for from cable companies they can get cheaper and easier online. Still, wouldn’t it be in these corporate behemoths’ best interest to act a little less… what’s the word… assholey?

The issue, if you’d like to wade briefly into the weeds, is that of “retransmission fees.” According to the folks at cnet, who understand this stuff far better than I do: “The broadcast networks are free to see over the air,” but the 1992 United States Cable Television Protection and Competition Act “requires cable operators and other pay-TV providers to ask broadcasters for permission to carry that programming — in other words, they need to get consent for retransmission. It also allowed broadcasters to ask the distributors, like a cable company, to pay for carriage, hence the fees.”

The exact increase of those fees is the object of some controversy. In its ads and publicity materials, TWC claims CBS is demanding 600% more than what the company has to pay in other parts of the country. CBS has called that figure “fictional and ridiculous,” but hasn’t offered up its own number. However accurate it is, Time-Warner is using that number for shock value; we see it and our jaws drop. Six hundred percent! What corporate greed!

But what Time Warner doesn’t say is what that’s 600 percent of. I reached out to Time Warner to ask two simple questions: How much are we currently paying for CBS? And how much more would we pay under CBS’s current proposal? Public Relations Manager Nathalie Burgos answered the first question thus: “CBS is carried as part of a programming package, and we typically do not credit customers for an individual channel change. Most broadcaster blackouts are brief and a credit is not warranted. But in the case of a protracted broadcaster blackout, we will assess the situation and make a decision about credits at a later date.”

Time-Warner would not comment on the second question. But in the meantime, I called my local customer service center to talk with a representative there about my bill.

A recorded message informed me that the money I have already paid for the blocked Showtime channels would be refunded “on a future bill.” The representative said the charge for our CBS affiliate wasn’t being similarly credited, and couldn’t tell me how much CBS costs each subscriber. “It’s bundled,” she told me, as TWC corporate did. “You’re basically paying for the package.” So I asked how much that package is — so that we could figure up, basically, how much of that package pays for CBS.

“CBS is considered part of our basic package,” she told me. “You’re paying 12 dollars and 34 cents a month for it.”

There are, according to their website, 62 channels in that basic package (not counting the music services), so we’re paying 19 cents per channel, on the average. So 600% of that 19 cents would be $1.14 per month. But let’s assume that CBS charges more than, say, “Russia Today.” We’re still talking pennies here, right? Right. Buried deep in a Reuters article on the blackout is this information: “RBC Capital Markets analyst David Bank estimated that CBS currently receives $1 a month per subscriber and is seeking to double the amount.”

Is CBS acting admirably here? Hardly. Because of the bass-ackwards way that Nielsens are so heavily weighted towards older viewers who (get ready to have your mind blown by this concept) watch television shows live, as they air, CBS’s elderly-friendly programming has created the false impression that they’re the only broadcast network that anybody watches. So yes, they’re taking advantage of that position to make more money.

But really look at that figure. They’re asking for another dollar per month from Time-Warner Cable, a company that already excessively gouges the few remaining customers that aren’t fleeing to Aereo service and Roku boxes. That dollar is what’s making the company fold its arms and refuse to budge, all the while trying to play the role of the concerned consumer advocate. In its latest TV spot, the company insists, “It’s wrong to withhold your programming, and we are determined to bring it back,” which is pretty hilarious when you consider that TWC is blocking CBS and Showtime from their customers (not the other way around), which most sane people would define as “withholding your programming.”

It’s a dollar a month, Time-Warner. You’re already charging me many more dollars than that, so enough with the bullshit line about how “we continue to fight hard to keep their prices down.” Just add another buck to my bill and let me have Letterman and Ferguson back.