CBS vs. Time Warner Cable: Network Exec's NYC Committee Meeting Comments Draw Fire

Kent Smith/©2013 CBS Broadcasting Inc
'Under the Dome,' which Time Warner Cable customers in New York, Los Angeles and other markets can't watch.

Martin Franks' comments that cable company was trying to "throttle" new competitors draws a TWC denial as the standoff keeps subscribers from watching the network's programming for a sixth day.

Another day, another war of words between CBS Inc. and Time Warner Cable as their retransmission content dispute leaves some 3 million cable customers without the network's programming.

Today's battleground? A New York City government committee, addressed by a CBS executive who warned that the cable company is trying to use the negotiations -- and attendant channel blackout -- to "throttle" new competitors such as Netflix, Amazon and Hulu Plus.

Time Warner Cable wasted little time in blasting what it called "erroneous statements."

Martin Franks, CBS's executive vp, planning, policy and government relations, told the city Council Committee on Consumer Affairs and Subcommittee on zoning and franchises that "CBS is not going to be Time Warner Cable's accomplice in trying to throttle those new services. That would hardly be in the best interest of New Yorkers or consumers across the country."

Franks cited Time Warner Cable's earlier proposal to restore CBS's stations if the network agreed to accept the terms of compensation under the old contract, signed in 2008.

RELATED: A Time Warner Cable Customer's Guide to Surviving the CBS Blackout

"Not only are those terms outdated," Franks told the government agency, "they would result in Time Warner Cable receiving incredibly valuable CBS content for free…Their real aim here is to use those outdated terms to hamstring our ability to do business with Netflix, Amazon, Hulu Plus and other new entrants that pose a new competitive threat to their former cozy, unchallenged monopoly status."

In a statement, TWC shot back: "We categorically deny that we are trying to keep CBS from doing business with any new entrant. Both our expired and proposed agreements with CBS place no restriction on their ability to sell all of their product to Netflix, Amazon, Intel or any other entity, or continue to give all of their best content away for free online, as they have to date."

Later, CBS issued a response to the TWC statement: "Time Warner Cable has effectively given CBS the following choice: We can stop doing business in the digital space or give them all our content in that venue, absolutely for free. We find both options unattractive.”

The blackout of CBS channels on Time Warner Cable systems in New York, Los Angeles, Dallas and elsewhere, and the suspension of Showtime pay TV channels on TWC cable systems nationwide, is now in its sixth day. At present there are no active negotiations.

In his New York City speech, Franks said CBS was surprised last Friday when TWC started blacking out their channels. "Instead of continuing to talk," said Franks, "Time Warner Cable told us they would have more leverage in the negotiations if they dropped us."

He also laid out CBS's argument to receive an increase in the monthly subscriber fee from Time Warner Cable, from around 50 cent to a dollar per month to about $2 per month.

"When they dropped CBS and Showtime," said Franks, "Time Warner Cable was sitting on a detailed 100 page proposal from us for a new agreement. That lengthy CBS proposal laid out economic terms that reflect the popularity of our program offerings to Time Warner Cable subscribers, and why we feel that CBS deserves a fair rate for those programs... particularly when at least 10 other channels that Time Warner Cable carries are paid more by them, even though their Nielsen ratings are much lower than ours."

Franks said the network's offer also included updated terms to cover new media that wasn't around when they last made a deal in 2008, such as the iPad and the role of Netflix and Amazon in content.

"Progress was actually made last week on some of the points," added Franks, "and at CBS, we were finally beginning to see a path to a new agreement... until Time Warner chose instead to cut off both the negotiations and our channels to their subscribers because, as they explicitly told us, it would give them more leverage."