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091813 TWC HJC Response L Moonves Says Digital Rights Worth Fighting For CBS CEO Says Time Warner Cable Was Living In The Past By: Jon Lafayette (Broadcasting & Cable) Sep 04 2013 - 11:50am An important aspect of its month-long carriage battle with Time Warner Cable was securing the digital future of content, CBS CEO Les Moonves said. “It was important we take a stand. This is a stand about content and how content is sold and how it goes to our consumers and how it will be sold in the future when digital viewing could eclipse more traditional forms of television," Moonves said in an appearance on CNBC Wednesday morning. CBS and Time Warner Cable reached an agreement [1]and the broadcaster's programming -- signals for 13-owned stations, plus cable properties Showtime, TMC, Flix ad Smithsonian Channel -- was restored to Time Warner Cable subscribers Monday evening. Terms of the deal were not disclosed, but Moonves said: “One of the things we won, one of the things we were fighting for, is the ability to slice and dice our content all over the place. To put it on Netflix, to put it on Amazon, to let people binge view. That’s our inherent right to do that,” he said. Moonves said that was important as viewing via digital sources increases and potentially surpasses traditional distribution. “I’ve been in the network television business for 30 years. I’ve been hearing about the death of network television and the death of our product. That’s not happening. It’s just changing,” he said. “Is it evolving? Absolutely. But at the core it’s still creating hits for both network and cable.” Moonves noted that young viewers on college campuses have few TVs and watch their shows online. “But they are getting measured, we are putting more advertising in, we are getting paid for that,” he said. “The important thing is exactly that. At the point—and that point is coming very soon—where the advertising [rates] online will be the same as they are on the network, we don’t care where you watch the shows.” He put that timeframe as within three to five years. Moonves said that overall, he was “very pleased with the deal” with Time Warner Cable. He said that he understood that the public probably resented both sides, but that it was important to get fair value for the top rated broadcast network from cable operators via retransmission consent. He insisted that CBS’s demands were reasonable, labeling Time Warner Cable as a company that “resented the fact that a broadcast network should get paid.” He added that Time Warner Cable “was “looking back at a day that was gone 20 years ago that no longer exists where networks are over the air and free and everyone should be able to have them.” Moonves said that he prefers CBS to be available over the air, but that if companies like web- based Aereo and Time Warner Cable find ways not to pay for CBS content, it might have to cease broadcast and become a pay channel. “We could do that if we were placed into a corner because of business reasons because of an Aereo or a Time Warner Cable saying they don’t want to pay us,” he said. “I think it is highly doubtful that that will ever happen but that threat is out there.” Moonves was asked about Time Warner Cable’s call for the government to review retransmission rules in the wake of the long CBS blackout. “To get the government involved is by far a really dumb thingm" he said. "That’s the last thing we want to do.” 1. http://www.multichannel.com/index.php?q=cable-operators/cbs-time-warner-cable-finally-sign- carriage-agreement/145231 What CBS and TWC Battle Could Mean for Future Retransmission Battles TV | By Tony Maglio [1] and Brent Lang [2] on August 9, 2013 @ 12:12 pm The network is in a position of power, but alternative platforms will truly determine the future of retransmission deals CBS and Time Warner Cable's ugly battle over carrier fees could have long-term repercussions for the television industry as it grapples with proliferating digital platforms. CBS programming has been off TWC in major markets for a week, and during that time the companies have accused each other of grandstanding and punitive conduct. Regardless how – and when – this battle gets resolved, experts expect more tussles between content creators and carriers as retransmission deals come up for renewal. Also read: FCC Chief on CBS, TWC Battle: Settle, or We'll Step In [3] Industry analysts say digital rights — not just the fees themselves — have become a big sticking point. Indeed, CBS Corp. Executive Vice President Martin Franks testified before the New York City Council on this very issue Thursday, saying that TWC has placed the network between a digital rock and a hard place. "Time Warner Cable has effectively given CBS the following choice: We can stop doing business in the digital space or give them all our content in that venue, absolutely for free," CBS followed up in its own statement. "We find both options unattractive.” For its part, Time Warner Cable is maintaining that the issue is about greed, not distribution. "We categorically deny that we are trying to keep CBS from doing business with any new entrant," Time Warner Cable responded to Franks in a statement. "Both our expired and proposed agreements with CBS place no restriction on their ability to sell all of their product to Netflix, Amazon, Intel or any other entity, or continue to give all of their best content away for free online, as they have to date." But a rival network executive pointed to digital rights as a big area of contention. The executive pointed out that some retransmission agreements allow for these rights and some don’t. The older ones don't because the concept of "TV Everywhere" [4] didn't exist yet. "Over the last year or so, in the newer ones, it's become part of the agreement," the network executive said. "That's why negotiations and agreements are taking longer now." Also read: CBS Slams Time Warner Cable Over Broadcast Fees for L.A. Lakers, Dodgers Games [5] By the time each new retransmission dispute arises, the platforms have changed, said Philip Napoli (right), professor of communications and media management at Fordham University. Content makers want flexibility to cut distribution deals with Netflix and other services. They also want any windows tied to distribution to be shorter, giving them the ability to capitalize on any new players who enter the space. Cable companies, meanwhile, are doing their best to prevent consumer cord cutting. Also read: CBS' Les Moonves to TWC's Glenn Britt: This Is Not Negotiating It's Grandstanding [6] "The cable operators and telcos are preparing for world when you can access programming over broadband, especially over mobile, but if they are going to make that investment they want to make sure that the content is delivered over their pipes," Larry Gerbrandt, a consultant and analyst at Media Valuation Partners, said. Tensions have been rising on the broadcast side for some time, with major networks eyeing the money cable companies pay for cable channels. Dennis Wharton, executive VP of communications for the National Association of Broadcasters, defends CBS, accusing Time Warner Cable, Dish Network and DirecTV of manufacturing a crisis in the hopes of drawing government intervention. "Eighty percent of retrans issues this years have been caused by those three companies," Wharton told TheWrap [7]. The breakdown in negotiations is leading even major broadcast figures like Time Warner CEO Jeff Bewkes and 21st Century Fox COO Chase Carey (left) to at least acknowledge that the old cable order may be heading toward some kind of shake-up. In discussions with investors this week, Bewkes and Carey admitted that cable packages may shrink or morph. But they both dismissed the possibility that subscribers will soon be able to pick and choose the channels they access on an individual basis. Sen. John McCain (R-Ariz.) has backed the so- called "a la carte" pricing model, but his efforts have built little traction. It seems unlikely that congress will step in to fundamentally alter the television business, and Carey said he did not expect bundling to change in the short to medium term. "A la carte is a fantasy," Carey said at an investors event on Thursday. "Consumers want a bundle; they just want a different bundle." Analysts say that any change will be spurred by customers themselves. If prices climb too high and enough customers actually end their cable service, it could force cable companies and networks to come to some sort of compromise. There is some evidence that customers are ditching cable in the favor of internet. According to Moffett research founder and analyst Craig Moffett, pay TV companies lost a combined 382,000 subscribers [8] during the second-quarter of 2013. See video: Wrap Battle: Our Reporters Take Sides in CBS-Time Warner Cable Feud [9] "Content creators are not going to willingly change," Christopher Marangi, the associate portfolio manager of the Gabelli Asset Fund, said, "At some point the volume of customers you reach outweighs the price increases from retransmission fees. If subscribers leave then affiliate revenue will go down." Napoli believes that each time retransmission disputes happen, they encourages broadcasters to pursue different platforms. It may increase the rate of the cord-cutting activities, which places the cable systems in a less tenable position than they used to be.
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