CBS warns it could get blacked out by AT&T as talks bog down

Editor’s note: The dispute between CBS Corp. and AT&T does not affect programming on local CBS affiliate WTTV-TV Channel 4, which is owned by Tribune Broadcasting. A story in IBJ’s Eight@8 newsletter on Wednesday incorrectly stated WTTV’s programming could be blacked out on AT&T’s DirecTV and U-verse services.

CBS Corp. warned that it could get blacked out by AT&T Inc.’s DirecTV and U-verse if it’s unable to reach a new contract to supply its programming to the largest U.S. pay-TV provider.

AT&T “continues to propose unfair terms well below those agreed to by its competitors and may drop CBS unless we agree to those terms,” the network said on Tuesday.

If no agreement is reached, DirecTV and U-verse customers in major cities like New York, Los Angeles and Chicago could lose CBS at 7 p.m. on July 19, the company said. CBS is the most-watched network in the U.S., while AT&T has almost 24 million pay-TV subscribers.

AT&T, in its own statement, accused CBS of trying to charge too much for its programming. Broadcasters “continue to give their signals away for free but also demand unsustainably growing fees,” the company said.

Fewer viewers

With the pay-TV universe losing subscribers in the U.S., programmers like CBS and distributors such as AT&T have had to battle over a shrinking pie. The companies that make TV series are pressing for more compensation, while cable and satellite systems are trying to contain costs and boost profit.

AT&T said the fees charged by station owners like CBS and Nexstar Media Group Inc., another broadcaster the company is fighting with, have about doubled in the last five years even as the audience for their prime-time programming has dropped by “roughly half,” citing Nielsen and S&P Global’s Kagan division.

CBS called that claim “inaccurate and ridiculous.” In the just-ended TV season, the network averaged about 8.87 million viewers a night in prime time, down less than 20% from five years ago, according to Nielsen data.

With the CBS spat in the open, AT&T is on both sides of such disputes, as the owner of pay-TV systems in negotiations with channel owners and as the new parent of WarnerMedia, which owns HBO and is a major program supplier. For the past eight months, customers of Dish Network Corp. have been unable to get HBO because of a contract dispute between the satellite TV company and AT&T.

Nexstar fight

Earlier this month, AT&T blacked out 120 stations operated by Nexstar, including affiliates of ABC, CBS, NBC and Fox, in a similar dispute over programming costs. Among those stations is WISH-TV Channel 8 in Indianapolis.

CBS’s last deal with AT&T was signed in 2012 as the network was beginning to press pay-TV systems to pay more for its programming. In September 2013, CBS won a big increase in fees after blacking out its programming from Time Warner Cable for a month before the start of the National Football League season.

“AT&T’s willingness to deprive its customers of valuable content has become routine over the last few weeks and months, and recent negotiations have regularly resulted in carriage disputes, blackouts and popular channels being removed from their service,” CBS said.