• by David Goetzl , August 14, 2013

As Time Warner Cable (TWC) and CBS trade barbs in their fee dispute, there’s plenty of posturing to admire as each blames the other for the resulting blackouts. No surprise here, but sometimes the spin can conveniently gloss things over and seem misleading. There’s a pretty good example of that on TWC’s part in a recent filing with the FCC.

In the Aug. 2 letter, TWC does make a point worth evaluating: do media giants such as CBS unjustly leverage retransmission consent rights for their broadcast stations to garner higher fees or wider carriage for their cable assets?

TWC writes that CBS won’t allow it to carry stations it owns unless that comes with an agreement to offer pay-TV programming -- notably Showtime -- at “rates and terms that CBS could never obtain if those programming services were sold separately.”

TWC says it has “repeatedly” asked CBS to give it a “standalone” offer for the stations, but CBS has “steadfastly declined,” while maintaining that “the broad composition of its programming package was non-negotiable.” TWC indicates CBS later made a “sham” offer with a more limited package. But, that still bundled carriage of the stations with Showtime and was “designed to whitewash CBS’s coercive conduct” since TWC would still have had to pay more.

TWC alleges the “abusive conduct” of tying retransmission consent for stations with rights to cable outlets is increasingly being used by CBS, Disney, 21^st Century Fox and NBCUniversal, while “making blackouts more likely and more frequent.”

In a statement, CBS said that TWC is “wrong” in its charges and uses the FCC submission as an “attempt to negotiate via filing.” CBS says it “adheres to all legal and industry standards in its negotiations with cable, satellite and telco providers.

The Aug. 2 letter from TWC outside counsel Latham & Watkins was written the day CBS-owned stations went dark on TWC systems in markets such as New York, Los Angeles and Dallas. Showtime and the Smithsonian Channel were among pay-TV outlets blacked out in all TWC homes across the country.

The letter touches on multiple issues, but bottom line is TWC wants the FCC to take action to “address the coercive bundling practices” used by CBS and others and effectively mandate that “standalone” terms are made available to just offer the stations.

Really, though, is that going to reduce the amount of blackouts? It’s likely distributors and broadcasters would just fight over the “standalone” offers. Are terms for Showtime really the stumbling point in the CBS matter?

TWC is determined to slow the growth in retransmission consent costs. CBS believes it’s a critical revenue stream that is changing the face of its business.

There have been multiple blackouts in carriage disputes where negotiations were between a station owner with no cable outlets to leverage. And, that’s where TWC’s argument seems a bit two-faced.

If TWC could make the case that it had no trouble cutting deals with so-called independent station groups, it might have some heft. But, that’s hardly been the case – even right now.

Last summer, a TWC dispute with Hearst Television brought blackouts in more than 10 markets including Cincinnati, Pittsburgh and Omaha. And, the folks in Omaha might be getting pretty sick of TWC.

After Nebraskans lost the ABC station last July, the CBS affiliate is now off the air in a TWC carriage battle with Journal Communications, which has no cable properties. The Journal dispute also has the NBC station blacked out in Milwaukee and stations dark in two other markets.

TWC, of course, would argue that the retransmission consent system is broken across the spectrum – that all station owners are making crazy demands for “must-have” programming. That may very well be the case.

But charging CBS with “coercive” bundling leading to blackouts when there’s no evidence you’re able to avoid them with other players who bring a different dynamic to the table seems to be bit of whitewashing.