Time Warner Cable uses its monopoly power to prevent its subscribers from watching CBS.
Time Warner Cable dropped CBS stations for three million viewers in Dallas, New York, and Los Angeles yesterday evening after the cable company and the broadcaster failed to reach an agreement on fees. In retaliation, CBS has blocked some visitors from watching shows for free on its Web site if Time Warner is their provider.
“Why am I supposed to be outraged that a cable company dropped a TV channel?” Mike Grunwald asked last night. It’s a good question. The blackout could last several weeks, according to some reports, so viewers would miss “Under the Dome” and the PGA championship next week, but CBS’s most popular television, including “Dexter” and the NFL, are off the air for the time being.
Also, Time Warner’s decision to refuse to pay CBS as much as the broadcaster has requested for its programming seems justified as a business decision. If anything, CBS should be paying Time Warner for the privilege of using the cable company’s distribution system. Those who really want to watch CBS can still do so using an antenna, or using Aereo to download broadcast signals onto their computers. CBS is a broadcaster, and its shows are free. A cable subscription makes getting those shows more convenient, expanding CBS’s viewership and helping the network sell advertising.
Still, there’s reason to be at least mildly outraged.
Negotiating tactics that are appropriate for a firm operating in a diverse market with fierce competition might not always be defensible in the television business. Time Warner is a monopoly, which means the company has an obligation to protect its customers’ interests, not just its shareholders’. If the company can’t show that they’re willing to fulfill that obligation, then better oversight is necessary. Joe Flint of the Los Angeles Times explains how the regulatory regime developed:
Although broadcast signals such as KCBS-TV are available free of charge to anyone with an antenna, Congress gave broadcasters the right to negotiate carriage fees from cable and other distributors as part of the 1992 Cable Act. Cable operators such including Time Warner Cable have always charged subscribers a fee to receive local over-the-air signals. …
Regulators and lawmakers typically have been reluctant to interfere in these fights between programmers and distributors. However, should the CBS-Time Warner Cable fight drag on until the football season starts, the pressure from politicians to reach a deal will grow.
“The longer it takes, the more CBS risks getting D.C. involved. This isn’t the middle of nowhere, this is New York City and Los Angeles,” said media analyst Rich Greenfield of BTIG Research.
More involvement from policymakers might not be a bad thing. There are plenty of others ways in which telecommunications firms such as Time Warner shortchange the public through their exclusive control over the market. Connection speeds in the United States are both slower and more expensive relative to speeds in other countries. That’s not a result of technological limitations, as Google is demonstrating in some U.S. cities, but of a failed regulatory system.
Time Warner and CBS are each giving the other’s phone number to customers in an effort to enlist the public’s frustration. If you’re frustrated, though, you should call your congressman. The threat of more vigorous oversight would be the surest way to get CBS back on the air in time for the NFL season.
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