CBS, Time Warner Settlement: Football Saved CBS From Itself


For fans in the largest media markets in the U.S., the Great Gridiron Game simply cannot be denied. On Monday, CBS and Time Warner Cable came to an agreement on rebroadcasting rights, putting an end to the month-long blackout which threatened to keep regional of coverage of the NFL’s AFC division from millions of fans subscribed to Time Warner’s service.

Before resolving the dispute with Time Warner, CBS lost some 2.8 million viewers in three of the nation’s biggest television markets, and about 1% of its total viewership nationwide. The blackout extended beyond CBS’ flagship channel to its Showtime, Smithsonian, and CBS Sports Network channels as well. While securing its viewership is certainly a concern for CBS, holding out in the face of such a lengthy suspension of service was ultimately about ensuring greater compensation for its prized programming.

CBS is the top-rated network in the country in every ratings demographic, and also commands the largest total viewership of the major broadcast networks. Powerhouse shows like NCIS and The Big Bang Theory (rated #1 and #3 overall respectively) are only a small piece of CBS’ pie, as the network produced 12 of the top 25 highest rated shows in the 2012-2013 season. Throw into the mix popular Showtime dramas such as Dexter and Ray Donovan, and it becomes all too clear that CBS is awash in quality content. With a track record like that, CBS is well aware that its programming is nothing short of a boon to the bottom line of service providers such as Time Warner.

Additionally, given the changes in how viewers consume content, restructuring the company’s revenue streams to remain competitive in the digital age is a necessary evil for a broadcast network like CBS. These days, anyone with an internet connection can find a way to see their favorite shows on the cheap, and with viewers accessing content elsewhere, ad revenues are diminishing. This makes options like increasing retransmission fees an attractive solution to bolster revenue over the medium-term while transitioning to providing content via digital distributers such as Netflix.

In the end, however, facing the ire of fans and the major loss of ad revenue provided by live game broadcasts was simply too daunting of a prospect for either CBS or Time Warner to commit to. For all its success in producing top-ranked content, CBS’ can’t match the sheer viewership of NFL games by far. Its broadcast of the Super Bowl was easily the most watched show on television this year, and its daily loss on average of around $400,000 during the blackout would pale in comparison to the losses it would take by failing to provide access to its weekly football broadcasts. Likewise, Time Warner would alienate large swathes of its customers through denying them access to their favorite matchups, and stand not only to lose ad revenue but subscribers as well. Luckily cooler heads have prevailed, so that pigskin junkies won’t mix their fix of football action.