Juan Monroy

As someone why doesn’t have a dog in the fight, as I don’t watch any CBS shows and I don’t subscribe to any multichannel video provider, I have been a bit detached from the CBS-Time Warner Cable retransmission dispute. Someone complains that they can’t watch…wait, what does CBS air in the summer?…and I think, “shut up and get an antenna!”

The timing of the dispute has been to the advantage of both parties. They get to dig in their heels during broadcast television’s lowest season, and they both save face since the stakes are rather low right now. The conventional wisdom, however, is that someone has to give in before the NFL season starts. Once that season kicks off, all hell is supposed to break loose. Time Warner Cable customers are supposed to revolt because they can’t get their Patriots vs. Bills, Titans vs. Steelers, or any of four other games on CBS on Sunday, September 8. Or so the thinking goes. In the meantime, we have a stalemate. Both parties are hanging tough, but until something gives, let’s examine the issues at hand.

Time Warner Cable is a multichannel video programming distributor (MVPD), an industry term for a company that brings you a lot of television channels. An MVPD such as Time Warner needs consent from a broadcaster to take its signal, from a transmitting antenna, and retransmit it through its own cable/satellite/fiber optic network to your home. In exchange for distributing the signal, the MVPD charges you a monthly fee. This is your cable bill.

Until 1992, MVPDs were required to retransmit all of the television stations in their local area and carry them on their channel lineup with the same channel assignment. The practice has a catchy name: must carry. For instance, the station you received on Channel 7 with your antenna was the same as Channel 7, although the signal was probably clearer because most people don’t know how to orient properly an antenna. Although the MVPD carried the stations’ signals, the stations were not compensated. Your cable company basically took something from the air for free and charged you for it. We have hated the Cable Company ever since.

The situation is different today. Cable companies must get permission from television stations for retransmission. Broadcasters can give the consent in one of two ways:

• They can require the MVPD to retransmit their station’s signal (“must-carry”) without compensation
• They can allow the MVPD to retransmit their station’s signal (“may-carry”) in exchange for compensation.

Most broadcasters choose the latter: a practice called retransmission consent. To get consent, MVPDs could either pay the station a fee or negotiate some other form of compensation. Most MVPDs balked at paying stations for what used to be free. Instead, they would offer to carry cable-only stations owned by the broadcaster or its parent company. For example, in 1993, the then-owners of ABC stations negotiated with the MVPD Continental Cable to carry its nascent ESPN2, instead of requiring a cash payment for retransmitting its broadcast stations, paving the way for its nationwide rollout.[1]

This situation would be a win-win for both parties. The channel lineup would expand for the MVPD, and thus their service was more valuable (and expensive), and the station owner would expand the reach of its cable channel and could sell more advertising (and charge more). Today, however, advertising revenue is unstable because of the dwindling audience, and thus stations and their owners are demanding cash, which they hadn’t done until very recently.

This is the background behind the dispute between Time Warner Cable, an MVPD, and CBS Television Stations, the division of CBS, Inc. that owns twenty-eight or so television stations. Each station that CBS owns is known as an owned-and-operated, or O&O, station. CBS Television Stations has reportedly demanded an increased payment for Time Warner Cable to retransmit the signal of its O&Os, and also Showtime, The Movie Channel, and Smithsonian. Time Warner Cable cannot retransmit those signals either because CBS owns those cable stations, too. Time Warner Cable is balking at the increase because they will either have to make less money (yeah, right) or pass along the charge to subscribers, who will complain about yet another rate increase. Thus, no Time Warner Cable customer gets to watch anything transmitted by a CBS-owned broadcast or cable television station. Tough toenails, as my seventh-grade science teacher used to say.

The ire of most customers is directed at the MPVD. After learning all of this, I almost sympathetic to the MVPD. Its costs are rising seemingly arbitrarily and has little recourse but to accept it. If they drop CBS and its many stations, their customers will revolt. They will either jump to a competitor, should they exist, or they will simply cancel their service. People are doing that already and missing must-have channels can only exacerbate the cord cutting.