Cut|Color|Post

excerpts, quips, and musings on the production and post-production industry, and other stuff of interest

CBS Gains Retransmission Rights

From the NY Times:

In the final deal, the cable provider will pay CBS a hefty increase in fees for the right to retransmit the signals of its stations in big cities like New York, Los Angeles and Dallas — a reported rise to $2 per subscriber over the next five years, more than double the network’s previous deal with Time Warner Cable.

Problem is that TWC isn't really the one paying this, the subscribers are. So CBS gets to pad it's account more as TWC will inevitably raise the cable subscription rate in those markets to compensate for it's losses. My gut feeling is that this will further hasten the cord-cutting that's been rapidly building up. So CBS gave itself a short-term windfall, but long term probably helped push the cable operators towards what seems to be their inevitable future - acting as a dumb pipe for Internet content.

At the same time, CBS rejected demands that it give up the opportunity to sell separately its content to digital outlets like Amazon and Netflix, insuring another bountiful revenue stream, likely to be worth hundreds of millions a year.

So CBS essentially took TWC to school in this negotiation. Two points: (1) CBS gains a huge short-term advantage by raising subscriber rates from $1 to $2. That's a substantial increase in revenue for CBS (and pay hike for TWC customers); then (2) CBS held onto the distribution rights for their content so as the major cable companies lose subscribers to the Internet (i.e. cord cutters) CBS can turn around and sell its content to the highest bidding Internet based distribution company like Netflix, Hulu, Amazon, etc.

I'm starting to wonder if Time Warner executives even showed up to these negotiations?!

 Update (9/9/2013): In this TV News Check article it further emphasizes just how much CBS won in this round of negotiations, not just for CBS but for all broadcasters when they come back to the negotiating table for retrans deals.

Meanwhile, the best Time Warner Cable CEO Glenn Britt could muster was that it could have been worse (TWC "ended up in a much better place than when we started"). The real giveaway is that he continued to whine about the inequity of the whole retrans process.
“The rules are woefully out of date, are the primary reason cable bills are rising,” he said. “We sincerely hope that policy makers heed that call and take action to prevent these unfortunate blackouts soon.”

I really hate to say that I agree with the TWC CEO, but I agree with TWC CEO.