CBS blackout looms for Time Warner Cable customers

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Time Warner Cable customers could lose CBS programming as early as this week.

We've heard the threat before: your favorite shows are being held hostage. This time, the dispute is between Time Warner Cable and CBS.

Time Warner Cable (TWC) claims that CBS (CBS) is demanding a big rate hike for cable customers in major cities. The cable giant says the fees will amount to 600% more than customers in other parts of the country will pay.

If the two companies do not soon come to an agreement about the fees, CBS could block Time Warner Cable customers from watching the channel and hit shows like "Under the Dome," "NCIS" and "The Big Bang Theory."

On Tuesday, the two companies extended the deadline to a 9 a.m. Thursday. This is the second time the self-imposed deadline has been extended since the contract between Time Warner Cable and CBS over the fee expired earlier this year.

Cable companies and satellite providers typically pay broadcasters "retransmission fees" in order to air the network's programming. It's not always the national networks like CBS, Fox (FOX), Disney's (DIS) ABC and Comcast's (CMCSA) NBC, that Time Warner Cable must negotiate with -- the cable provider has to agree to terms with all the various local affiliate stations to carry the national networks' content in each metropolitan area, many of which are owned by companies other than the big broadcasters.

That's where the latest round of deal-making is getting held up: CBS is currently negotiating on behalf of the several local affiliate networks it owns outright, and Time Warner Cable argues that CBS is demanding fees that are much larger than the fees it pays to other independent local stations that carry CBS shows.

Some analysts think CBS is holding most of the cards, given it attracted more viewers than any other network last season, as it has done 10 times in the past 11 years.

But BTIG's Richard Greenfield wrote in a analyst note Monday that "CBS is overestimating its leverage in this battle." The network will not begin showing its new fall lineup until late September, two months from now, and the network's next major national sports event, the U.S. Open Tennis Championship, will not air until September 8.

Customers in New York, Los Angeles, Dallas, Boston, Pittsburgh, Chicago, Detroit and Denver could be affected, according to Time Warner Cable. But customers in other areas of the country are not in jeopardy of losing the CBS channel.

CBS has been running TV commercials warning customers of the negotiations and that "Time Warner Cable is threatening to hold your favorite shows hostage."

"Time Warner Cable is planning to drop the most popular programming in its entire channel lineup because it won't negotiate the same sort of deal that all other cable, satellite and telco companies have struck with CBS," the company said in a prepared statement. "CBS remains committed to working towards a mutually agreeable contract."

Time Warner Cable spokeswoman Maureen Huff said that the company's executives are also hoping to reach a fair agreement.

"We are willing to pay for CBS, and we have offered them significant fees," Huff said. "But their current demands don't represent a good value for our customers."

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