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Time Warner Cable teases CBS with blackout; then retreats

The Time Warner Cable office is shown in Carlsbad, California November 5, 2012. REUTERS/Mike Blake
The Time Warner Cable office is shown in Carlsbad, California November 5, 2012. REUTERS/Mike Blake

By Liana B. Baker

(Reuters) - Time Warner Cable Inc has agreed to keep the CBS network on the air in New York and Los Angeles until the end of the week after it briefly blacked out CBS's stations in some areas on Tuesday when the two sides failed to reach an agreement.

Negotiations between CBS and Time Warner Cable continued after midnight in New York, according to a spokeswoman for the cable operator. The companies agreed to an extension with CBS until Friday, August 2, at 5 p.m. EDT.

A Time Warner spokeswoman confirmed that CBS had gone dark in "some but not all areas" around midnight EDT, which deprived those viewers of late-night CBS programming. It also pulled the plug on other CBS-owned cable networks including Showtime, TMC, Flix and Smithsonian from its lineups. But Time Warner later said it had relented "at the request of CBS" and stopped the process of blocking the CBS signal from its systems.

The action came after weeks of often contentious negotiations over increases in fees that CBS receives from cable and satellite operators.

CBS, which is the No. 1 rated U.S. television broadcast network with shows such as "The Big Bang Theory" and "NCIS" has never had a wide-scale blackout, it said.

Had Time Warner Cable not restored the signal when negotiations resumed with CBS, an estimated 3.5 million Time Warner cable subscribers would have been affected in cities such as New York, Los Angeles and Dallas. It would not affect CBS affiliate stations owned by other companies.

"We offered to pay reasonable increases, but CBS's demands are out of line and unfair," Time Warner said in a statement. "They want Time Warner Cable to pay more than others pay for the same programming."

At an event in Los Angeles on Monday night, CBS CEO Leslie Moonves told reporters that "there's progress being made and hopefully we don't go dark. We still believe our content is worth a lot of money."

The threat of blackouts have become increasingly common as networks, which provide programming, square off against cable and satellite TV operators that pay retransmission fees to transmit programs into homes around the country.

Last summer, satellite operator DirecTV's 20 million customers were unable to receive Viacom's cable networks, including Nickelodeon and MTV, for 10 days after those companies failed to strike a new deal.

CBS's contract with Time Warner Cable expired in June and the two sides have already extended the deadline twice. While the companies negotiated, both ran TV commercials aimed at getting the public on their side.

Time Warner Cable's spot accused CBS of giving New York a "black eye," while CBS urged viewers to "say 'no' to Time Warner Cable" and gave them Time Warner Cable's phone number.

The loss of advertising dollars would be somewhat less painful for CBS during the summer, when networks air mostly reruns and audience numbers drop. But if a blackout persisted into August, CBS could lose audiences in the some of the nation's largest markets for its reliably popular National Football League games.

"If there was a time for this dispute to occur, it would be in the late summer," Morningstar analyst Michael Corty said.

Time Warner Cable reminded subscribers in New York that they sign up to receive CBS from media mogul Barry Diller's Aereo TV service, which streams over the air broadcast signals to a tablet or computer for $8 a month. Aereo pays CBS no fees.

(Reporting by Liana B. Baker in New York, Lisa Richwine and Ronald Grover in Los Angeles and Sakthi Prasad in Bangalore; Editing by Edwina Gibbs, Patrick Graham and Maureen Bavdek)

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