Blurred Lines: The CBS/Time-Warner Fiasco

"Here's the inside scoop on retransmission fees."

All summer long, everybody's been talking about it.  You can't turn your eyes away as the controversy rages:  Is it demeaning to viewers or just reflective of the industry's direction?

Forget Robin Thicke's music video.  I'm talking about CBS vs. Time-Warner.

Having worked for both cable and broadcasters (as have most have you), I don't see this ending well.  Even if it gets resolved on NFL Eve.

If only it were this simple...

I can see both sides in this showdown.  As retransmission rates increase dramatically and subscribers continue to cut the cord (over 300,00 in the past year), TW is drawing a line for itself and other cable systems (as well as satellite).  However, their argument that broadcast stations are available for free is a fallacious one, as this is outside the contract they have with subscribers.

Meanwhile, broadcasters are more connected to their communities, with public service responsibilities and involvement unlike any other local business.  Although advertising is up in the past few years, so are production costs.  And once retrans fees became federally-mandated in 1992 (with new agreements every 3 years!) and became a viable stream of profit, there was no turning back.

What I can't see... is the real end game of both sides.

Is TW really in this to protect subscribers' rates?  Give me a break.  Just like any corporation bordering on a monopoly, their responsibility is to their shareholders.  Period.

Is CBS really in this to ensure viewers get the shows they want?  Hardly.  Otherwise, why would they block access to their website?

So... what does TW really want?  They're not showing their cards, but are certainly in no rush to resolve this mess, no matter how many cancellations their systems absorb.  I suspect there are internal discussions about eliminating broadcast altogether. If broadcast really is too expensive and the halcyon days of cable are long-gone, why not just dump it altogether?

Or is this?

Is this the future of television?

Although they appear similar, broadcasters and cable operators view the world differently.  This time, I'll wager it's going to lead to a fundamental change in the business.  One in which newer delivery systems will be key and both sides will be more profitable.  Movies and series from Netflix, network shows from OTA and Aereo, cable nets from cable, that sort of thing. 

As always, the bottom line is the bottom line.  And there's nothing blurred about that.

-Ed Roth
edrothshow@gmail.com

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