Leslie Moonves, CEO of CBS Corp., fired back at Time Warner Cable Tuesday, calling its latest offer to settle their fee dispute an act of “grandstanding” not rooted in business reality.
“First, after reviewing your letter, we have concluded that there is not a sincere or helpful proposal in it,” Moonves wrote in a letter addressed to TWC CEO Glenn Britt. “It is, rather, a well-wrought distraction.”
On Monday afternoon, Britt sent a letter to Moonves agreeing to “new economics” that TWC agreed to earlier while keeping other terms of their old contract that expired at the end of June.
Britt also implied that he’d forgo digital rights to streaming CBS shows.
Given the emergence of many streaming services in the last few years, “new economics” can’t be established without new terms and conditions, Moonves said.
“Those terms and conditions, better known as rights, were established in 2008. That was before the introduction of the iPad. Netflix was still doing little but mailing out DVDs,” he wrote. “What you are asking for, pure and simple, is either to gain the right to deliver content for free that others are paying for, or to inhibit CBS from licensing content to existing online competitors and new companies that are now emerging.”
CBS and TWC are negotiating for a new retransmission contract, which spells out the amount of money TWC pays CBS for the right to its stations’ signals. With the negotiations dragging on and the war of words escalating, TWC removed CBS from its TV lineup in eight markets nationwide, resulting in more than three million TWC customers going without the No. 1 primetime network and its popular shows – such asUnder the Dome, NCIS and The Big Bang Theory. The blackout affects mostly TWC’s customers in New York, Los Angeles and Dallas.
If CBS refuses Britt’s newly proposed terms, TWC wants to air CBS on an “a la carte” basis by allowing CBS to determine retransmission fees for its stations. That could result in CBS showing up as a separate line of item in customers’ cable bills. “This way, rather than our debating the point, we would allow customers to decide for themselves how much value they ascribe to CBS programming,” Britt wrote.
Moonves’ response to the offer: “As to your groundbreaking ‘offer’ to go a la carte: Anyone familiar with the entertainment business knows that this is an empty gesture. The economics and structure of the cable industry have created a certain way that content is distributed and compensated. We both know that a true a la carte universe is not one that Time Warner Cable welcomes.”
Moonves was particularly upset that Britt chose to release the letter to the media without alerting him first, and complained of a lack of communication between the two executives. “I was surprised to get your letter yesterday, particularly since I hadn’t spoken to you in more than a week,” he wrote. “Come to think of it, you haven’t reached out to me personally, as I have to you on more than one occasion, even once during this entire matter, so your communication was both unexpected and welcome.”
“The fact that you released it simultaneously to the media, however, dampened my enthusiasm somewhat. It made me suspect that the document was not, as I hoped, a sincere offer but rather a public relations gesture of some kind,” Moonves said.
Courtesy of USA Today