July 23 (Bloomberg) -- Time Warner Cable Inc. and CBS Corp. extended negotiations on a new agreement to keep carrying the television network on the second-largest U.S. cable provider.
The new deadline for the talks is July 25 at 9 a.m. New York time, compared with an earlier cutoff of midnight tomorrow, the companies said. The date was changed because the July sweeps season, when ratings help determine advertising prices, ends early on July 25, according to Maureen Huff, a Time Warner Cable spokeswoman.
The companies are clashing as New York-based CBS, the highest-rated broadcast channel, seeks higher fees for the right to retransmit its programming. That’s putting pressure on pay-TV companies such as Time Warner Cable, which must decide whether to absorb the higher costs or pass them on to consumers and face a backlash.
There remains a “very real threat that Time Warner Cable is going to drop our stations in New York, Los Angeles and Dallas,” CBS Chief Executive Officer Les Moonves said in a memo to employees today.
Time Warner Cable Chief Executive Officer Glenn Britt has threatened to drop networks that “cost too much relative to viewership.” CBS doesn’t fall into this category because “we carry our own weight,” Moonves said.
CBS has asked for prices 600 percent higher than other affiliates receive for the same programming, according to New York-based Time Warner Cable.
CBS programs, including “The Big Bang Theory” and “60 Minutes,” are “among the most popular in the industry” and deserve a rate increase, Moonves said in the memo.
Retransmission fees have become a frequent sticking point in negotiations between pay-TV providers and broadcasters. CBS’s retransmission revenue jumped 62 percent in its most recently reported quarter, which ended in March, from a year earlier.
“We are willing to pay for CBS, and we have offered them significant fees,” Huff said. “But their current demands don’t represent a good value for our customers.”
Time Warner Cable told the New York Times this week its customers have the option to watch CBS with the New York-based online service Aereo Inc. if the sides can’t reach a deal. Aereo charges $8 a month for online access to broadcast channels.
CBS has successfully negotiated deals with other large pay-TV providers including Comcast Corp., DirecTV, Dish Network Corp. and Cablevision Systems Corp., Moonves said. Time Warner Cable is “unique in its aggressive approach,” he said.
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