This post originally appeared as an insight for Outsell’s customers. Republished with permission.
We don’t know who was the biggest loser in the blackout war between CBS and Time Warner Cable, but there weren’t any winners.
CBS and Time Warner Cable have come to an agreement, following a month in which subscribers in New York, Los Angeles, and Dallas were unable to get their local CBS stations on their cable systems. Among other things, CBS wanted more money per subscriber from Time Warner Cable, and Time Warner Cable wanted more restrictions on how CBS could resell its own content.
Both companies sought a public advantage, and both companies made their partners look bad. Time Warner Cable took CBS’s local stations and their cable channels (Showtime Networks, CBS Sports Network and the Smithsonian channel) off their system. CBS denied access to its websites to Time Warner Cable customers.
The two companies finally came to an agreement just before the NFL was to return to CBS and a few weeks before the fall television season.
The terms of the agreement are not public, so we don’t know who blinked, and how much, but the dispute is an indication of deeper problems in both the cable and broadcast industries.
Both parties in this dispute, and their industries, came out looking more vulnerable.
CBS was not in a good negotiating position. Broadcasters have become dependent on fees from cable operators. Their local advertising markets aren’t healthy, and the biennial flood of the political advertising is now at risk from cheaper, more targeted internet advertising.
Time Warner Cable’s hard line reflects the maturity of their business. Subscriptions are flat, the internet access boom is over, and prices have probably peaked. It’s time to cut costs.
Consolidation is the natural fate of mature industries, and the cable operators are about to take the next logical step.
Broadcasters are not ready for what’s about to happen. Many station groups have been consolidating in hopes of being in a better position with the cable carriers. But if it turns out that CBS wasn’t able to make sufficient progress against Time Warner, even the largest of station groups may not be big enough to hold their own. And then the only rationale for broadcast consolidation will be further cost-cutting.
Consumers didn’t stop watching TV during the blackout. A few weeks of new behaviors could be enough to change some people’s lifetime of habit. Not many people, but not zero, either.
There were plenty of substitutes for CBS summer programming available both on cable and the internet. Even CBS’s Steve King miniseries Under the Dome, was (and still is) available for streaming free for Amazon Prime customers.
The Great CBS Blackout of 2013 was not enough to get anyone to drop their cable service, or watch less network TV. Unless, of course, they’d already been considering their alternatives.