CBS Surrenders in Battle Over Cable System Fees

Abandoning a three-year campaign, CBS said Monday that it is throwing in the towel on efforts to collect payments from local cable systems for permission to carry its TV signal.

The move effectively puts the nail in the coffin of a broadcast industry effort to charge cable operators to carry the programming of television stations.

CBS’ surrender also means the network will have to shelve indefinitely its plans to launch a new cable TV channel dedicated to news and public affairs.

Plans for the new channel ran into considerable resistance from cable operators, even as CBS scrambled to propose different formats, ranging from “vintage comedies and drama” to an “innovative sports/news channel.”

With just eight days to go before the deadline for so-called retransmission consent agreements between broadcasters and cable operators, CBS Chairman Larry Tisch conceded that it was impossible to reach a “meaningful” deal “at this time.”

Meanwhile, NBC said Monday that it reached agreement with Tele-Communications Inc., the nation’s largest cable TV operator, under which TCI will continue carrying NBC’s signals. TCI has more than 350,000 subscribers in Southern California, including systems in Arcadia, Whittier and Redlands, NBC said.

TV stations around the country must decide by Oct. 6 whether to require local cable systems to carry their signal--in which case no money would change hands--or attempt to negotiate a payment for their signal.

If the broadcasters and cable operator cannot reach an agreement on payment, the operator has the right to drop the station from its channel lineup. In coming weeks, local cable systems could begin dropping TV station signals if agreements are not reached.

The CBS about-face is significant because the network was at the forefront in trying to negotiate the retransmission consent agreements with cable operators.

After a heavy, CBS-led lobbying campaign, broadcasters were granted the right to negotiate fees from cable operators to retransmit their TV signal. The rights were included as part of last year’s cable TV regulation bill adopted by Congress.

But cable operators, long accustomed to carrying the signals of local TV stations for free, were adamant in their refusal to pay broadcasters the fees they sought. Cable operators said they would not pay for programming that other consumers could watch for free.

Instead, many cable operators agreed to give broadcasters channel space on their cable systems for carriage of new cable channels owned by the networks. The face-saving compromise allows the networks to launch potentially valuable cable TV channels while allowing cable companies to keep their vow not to pay for network programming.

Fox, for example, will launch a new cable channel called FX in more than 20 million households next year. ABC already has more than 10 million subscribers committed to carry ESPN II, and NBC wants to launch a new all-talk cable channel called America’s Talking.

In a statement, Tisch blamed the cable industry for sabotaging its plans. When the network realized it could not negotiate for cash payments, he said, it looked for ways to launch a new cable network but was stymied by the cable industry.

However, CBS antagonized many in the cable industry by demanding that its stations be paid cash for the right to retransmit their signal, a position CBS executives defended on the grounds that a broadcaster’s signal “had value” and boosted cable viewing.

On Monday, TCI spokesman Bob Thomson struck a conciliatory tone, saying he was disappointed that CBS could not launch a new cable channel that the industry would endorse.

Tisch said CBS will grant permission to cable operators in the seven markets where it owns TV stations to carry the signal of CBS stations without charge for one year.

That should give the network time to come up with another idea for a new cable channel, or try a different strategy when the agreements come up for renewal.