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Don’t Mess With CBS in Broadcast Negotiations

In many ways it’s a good time to be a broadcaster: Profits are high thanks to the surge in political advertising, and the rise of Twitter and other social media platforms has given a new generation reason to embrace live TV shows as a shared experience.

Most significantly, broadcasters continue to enjoy big advantages over cable in the ratings, thanks to highly popular programming such as professional football and “American Idol.” That has given broadcast stations increasing leverage to demand higher fees from cable companies during retransmission consent negotiations, opening up a new stream of revenue for stations affiliated with the “big four” networks.

No network has benefited more of late than CBS, which enjoys the highest ratings among the four major broadcasters.

CBS used the leverage of those ratings, and the lure of the Super Bowl among other content, to emerge largely victorious from its standoff in August with Time Warner Cable, according to most industry reports. CBS was able to significantly increase the subscriber fees that Time Warner pays to carry its broadcast channels, while ensuring that its new cable sports channel will also be carried.

New video distribution platforms — notably mobile phones, tablets and the Web — have given content providers new alternatives to pay-TV distributors. But red flags were raised during the recent retransmission dispute after reports that CBS blocked Time Warner Cable broadband subscribers from accessing its content over the Internet on their home computers.

To some, blocking broadband subscribers from accessing the content is a violation of the good faith standard in the 1992 Cable Act, while others wondered whether the move would run afoul of the Federal Communications Commission’s Open Internet Rules. The commission is looking into the matter, but most believe action is unlikely, especially before the D.C. Circuit Court of Appeals decides whether to uphold or strike down the FCC’s rules.

If the court upholds the FCC’s version of the “net neutrality” rules, and incoming Chairman Thomas E. Wheeler is confirmed by the Senate, then CBS may eventually have to explain itself before the commission. But that’s a lot of ifs, and until then, it’s good to be No. 1.

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