CBS, Time Warner Duke It Out Over Fees

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July 24 (Bloomberg) -- Time Warner Cable is balking at renewing an agreement to carry CBS’s broadcast network on its pay-TV system because the entertainment company is asking for too much money. RBC Capital Markets Analyst David Bank speaks with Scarlet Fu on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Cbs has never actually pulled its signal in these retransmission negotiations.

Is this time different?

I think it really is.

I think we're entering into an era where these are being revalued.

If you look at the ratings that cbs delivers, investments in programming, 5-10 times more than the average kind of comparable cable network they are currently getting the same rate at.

Spending 5-10 more times.

5-10 more times viewers in the same payment.

I think they have finally had enough and willing to pull the signal.

Who is right?

I think cbs has a great case.

The reality is because of audience level in the program investment, they make a pretty good case.

Typically it is the content that generally wins.

We basically have not seen a single retransmission consent or cable battle with the content has not won.

Talk about the timing.

The nfl season kicks off in september.

Does that give cbs the hand -- upper hand automatically?

If i were cbs, i would prefer this before the before the big kick off.

People do not want a lot of television over the summer.

The argument will be will subscribers miss the content over the summer?

I think it will come up a far less than if it were the new season and the ball.

U.s. open tennis is probably the next big thing to happen.

Take nothing compared to all -- but thing compared to football.

At the end of the day, viewers are getting increased ability to watch tv shows on different platforms come a different devices.

I think when the utility is not increasing anymore and they are paying more, they will start getting more frustrated.

This release speaks to the business model.

Typically we of san espn and other cable networks collecting these fees, not necessarily over the air broadcasters.

That has completely changed.

It really has.

This goes back to the separation of cbs and viacom.

I think the reality is the economics of the business are such that if you do not get subscriber revenues, you cannot keep delivering the quality of programming in sports in scripted and unscripted premium program they have delivered.

A necessity for the business model.

We have a chart.

They do not necessarily move hand in hand.

Certainly the case with cbs.

When they are negotiating these licensing fees, it does the duration of start getting longer as the cost of programming surges and the landscape changes so quickly?

The networks will approach so much that we know the long-term margins have to be.

The distributors are probably going to want to lock in the longer agreements to get visibility.

I think the price will be half -- will have to be higher.

There is a contest 10-year deal.

I am guessing cbs would have asked for more money.

You push for higher dollars of the duration will be long.

Don't how is ari switcho in this up?

-- aereo switching this up?

Is available in the u.s. market.

Will we see this as a business opportunity, maybe with time warner sponsoring the project?

Right.

It gives cable operators leverage.

It does, but does it really?

Can you turn on your television and setback and watch it?

For the most part, probably not.

I think it will get press and the tension and maybe get traction because of it.

Certainly here in new york, but maybe not in the other cities.

Legally it has been tested for more in new york and seemed to be a more acceptable solution.

Thank you.

David bank, media analyst

This text has been automatically generated. It may not be 100% accurate.

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