• by David Goetzl  @dgoetzl, July 19, 2013

There’s still a significant amount of time before the CBS stations in the country’s two largest markets could go off the air in Time Warner Cable (TWC) homes. The bet is a deal will be reached, although maybe just minutes before a would-be blackout next Wednesday.

There’s too much to lose for both sides if darkness comes to New York and Los Angeles. CBS takes pride in avoiding the type of blackouts for its owned stations that other station owners have endured. In the process, it’s allowed the Tiffany network to operate sort of above the fray that comes when programmers and operators start throwing barbs at one another during public carriage disputes.       

But that has come to a halt with ads from CBS and TWC charging the other side with being the problem. It doesn’t appear as if the dart-throwing has gone outside the bounds of the typical stuff that happens during these disputes, but it is weird that CBS is now in the mud.

TWC has been there before and had a notable blackout with Hearst stations last summer.

According to a note from Wells Fargo analyst Marci Ryvicker on Friday, CBS wants $2 a subscriber per month and won’t accept less. TWC blackouts in New York and Los Angeles would impact about 10% of the CBS footprint, Ryvicker wrote.

TWC, though, could face major consumer backlash with the darkness impacting almost a third of its subscriber base. CBS could also pull Showtime from all of its homes nationally – or TWC could in theory do the same to gain some leverage.

Among the anti-TWC advertising from CBS is a radio spot that directs viewers to a micro-site where Showtime asserts TWC may “suspend” Showtime service. The site also notes Showtime – read CBS – believes it is negotiating in good faith and has made CBS a fair offer. Per usual in these disputes, Showtime lists other providers who will continue to offer Showtime no matter what happens and would be willing take on new subscribers should a person want to switch.

As Ryvicker hints, the question now permeating the TV business is whether content or distribution (operators) have the upper hand. Content appears to have the advantage. Forget consumer hunger for it.

With the Internet, CBS could make some programming available in markets with blackouts during the standoff, while TWC endures customer defection.

But these standoffs that lead to blackouts now always come with the backdrop of potential government intervention. Programmers like the retransmission consent policies as they are. Operators want all kinds of change and relief from what they believe is the scales titling in favor of content.

Fox was off Cablevision in the New York area for a lengthy period a few years back and that did become the subject of Congressional hearings. Lengthy blackouts covering so many millions of homes in New York and Los Angeles would likely ramp up interest on Capitol Hill.

There is one curious factor in the standoff. With Comcast and Verizon deals, it would seem CBS has established a template for other operators to follow. Station X costs Y, etc. So, TWC balking at would-be market prices seems aggressive. That’s assuming CBS is indeed not trying to charge TWC more because it holds the keys to valuable content to so many of its customers.