CBS Corp.'s CBS flagship broadcast network was dropped from Time Warner Cable Inc.'s TWC TV service in New York, Los Angeles and other major markets Friday after long-running negotiations between the companies failed to reach a deal on fees.
The blackout, that started at 5 p.m. Eastern time, came more than a month after a previous agreement between CBS and Time Warner Cable expired, although it had been extended several times to allow negotiations on a new deal.
The two companies have been negotiating over fees to be paid by Time Warner Cable for the right to carry CBS programming. In a statement, CBS accused Time Warner Cable of negotiating "in a combative and nonproductive spirit…while maintaining antiquated positions no longer held by any other programming distributor in the business."
Time Warner Cable said in a statement that "CBS has refused to have a productive discussion" over the past few days. "It's become clear that no matter how much time we give them, they're not willing to come to reasonable terms," it said.
About three million subscribers were expected to be affected by a blackout, which covers CBS Corp.'s Showtime premium channel as well as CBS.
Time Warner Cable has accused CBS of demanding fees in certain big cities much higher than what the cable operator pays in other areas of the country. CBS had said that Time Warner Cable was refusing to negotiate deals at parity to what other cable, satellite and telecom companies had struck with CBS.
The dispute highlights growing tensions between TV channel owners and distributors. Pay-TV operators have argued that the fees demanded by broadcast networks, known as "retransmission fees," are increasing their programming costs. Those fees have become increasingly important to broadcasters such as CBS, which has said it expects retransmission revenue to roughly quadruple to $1 billion a year by 2017, helping diversify broadcasters' revenue away from a heavy reliance on advertising.
Generally, both sides and consumers lose during a blackout. Cable and satellite operators see subscriber defections and television channels suffer steep declines in ratings. Last year, Viacom Inc.'s channels such as MTV and Nickelodeon were blacked out on DirecTV's satellite TV service for nine days in a fee dispute.
Time Warner Cable has warned that it could put another network into CBS's channel slot permanently after a blackout. The cable operator said last week it was in talks with several programmers to take the slot.