CBS, Dish Agree to Short-Term Contract Extension

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Leslie Moonves

The companies avoided what could have been a blackout if 14 local CBS stations in some of the biggest markets in the country were to go dark

CBS and Dish Network, engaged in contract negotiations over a deal that was set to end on Thursday night, have agreed to a short-term extension, avoiding what could have been a blackout — including live NFL games — if 14 local CBS stations in some of the biggest markets in the country were to go dark.

Neither Dish or CBS are commenting on the negotiations but, beyond price, observers speculate that digital rights and Dish’s Hopper DVR service are sticking points. CBS doesn’t like that the Hopper’s “Auto Hop” feature allows for easily skipping commercials, and Dish doesn’t like that CBS makes its content available to streaming services and recently launched All Access, an over-the-top product whereby a $5.99 monthly subscription fee gets users shows on-demand a day after they air on TV.

Dish is also readying its own OTT service and might be angling for more digital rights to CBS content, including sports, that CBS isn’t willing to give, unless it involves a healthy boost in fees.

Ahead of Thursday’s deadline for a new deal, several industry insiders were sizing up the situation. Charter Communications CEO Tom Rutledge warned on Tuesday, for example, that cable TV providers would not pay top dollar for content that was also available on the Internet.

“If they’ve sold their relationship to you to other people and your customers can go get that … they’ve put themselves in the position where it’s costless to take them out, and some people have pushed that envelope,” Rutledge said at the Liberty Media investor day conference.

At the same event, Liberty chairman John Malone said that sports rights are climbing so high that there is little left in budgets to pay for entertainment content. Along those lines, former Time Warner CEO Richard Parsons was asked about Dish chairman Charlie Ergen this week on Bloomberg TV: “Charlie’s a tough guy, and he’s always been a maverick … people don’t really care about the economics between the carrier and the provider of the content. They just want their football. It’s football season. It’s CBS. Charlie’s going to lose.”

On that same show, Parsons backed up his assertion by noting that when Time Warner Cable had a spat with CBS a year ago, the cable TV provider “got its head handed to them.”

If Dish and CBS fail to strike a deal and CBS yanks its programming from those 14 markets, it will mark the second such occasion in a month. In October, Turner Broadcasting, owned by Time Warner, took CNN, Turner Classic Movies and Cartoon Network away from Dish.

These sorts of contract disputes are oftentimes played out in public, and this one promises to do so even more than others, given the possibility that Dish subscribers could miss NFL games. Also, the two companies have already been publicly chastising each other.

In Denver, where Dish is headquartered, CBS has been running ads warning that subscribers risk losing Denver Broncos football games. CBS has also set up a website that encourages customers to call and email Dish and voice their displeasure.

Dish, meanwhile, would blame CBS for yanking its programming, which includes new episodes of TV’s No. 1 sitcom: The Big Bang Theory.

“Only CBS can force a blackout of its channels,” Dish said in a statement issued to the press prior to the extension of contract negotiations.

But if history is a guide, one can expect Ergen to ramp up the rhetoric if the dispute isn't resolved. With Turner, for example, he called the loss of channels a “non-event” and he noted declining ratings for CNN. He even suggested that Dish would be fine if it lost TNT and TBS, also, if he’s unhappy about the price when those deals soon expire.

CBS, run by CEO Leslie Moonves, is in a much stronger position than is Turner, because its shows are more popular and live NFL games are considered crucial programming that, if lost, numerous Dish customers would cancel their service and go elsewhere. And Dish is already hurting in that regard, having lost 12,000 subscribers in the third quarter while analysts were expecting the company to add 22,000.