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CBS, Time Warner Cable trade barbs on Day 7 of blackout

Date August 08, 2013

By Liana B. Baker

(Reuters) - A CBS Corp executive said on Thursday that negotiations with Time Warner Cable Inc have "gone badly off course" and accused the cable company of trying to negotiate terms that would limit CBS's ability to do business with such online TV services as Netflix Inc and Amazon.com Inc.

The comments, made at a New York City hearing on Thursday, came on the seventh day of a blackout that has deprived more than 3 million Time Warner Cable customers from watching CBS stations in large U.S. markets including New York and Los Angeles.

Despite the war of words, both companies confirmed on Thursday that they are negotiating again.

If the two companies fail to strike an agreement by Sunday, Time Warner Cable customers in the affected cities will miss golf's PGA Championship, the final tournament of the four major golf events this year.

Rory Whelan, Time Warner Cable's regional vice president of government relations, in testimony at the same hearing, accused CBS of "coercive bundling practices" and said CBS's blocking of Time Warner Cable's Internet content exhibits conduct "beyond the pale." Testimony from both executives was provided to Reuters by the companies.

Martin Franks, an executive vice president at CBS, said Time Warner Cable has been insisting on securing the same terms and conditions of their last agreement which started in 2008 and expired in June. He said Time Warner Cable is asking for terms that would supply it with some CBS content for free, which online players such as Netflix pay "millions of dollars to distribute."

"Perhaps their real aim here is to use those outdated terms to hamstring our ability to do business with Netflix, Amazon, Hulu Plus and other new entrants that pose a new competitive threat to their former, cozy, unchallenged monopoly status," Franks said.

He added that "CBS is not going to become Time Warner Cable's accomplice in trying to throttle those new services," referring to companies such as Netflix and Amazon.

Time Warner Cable said at the hearing that it had proposed two options for it to resume carrying CBS, which were both rejected by the broadcaster. Earlier this week, Time Warner Cable's chief executive, Glenn Britt, made a proposal to CBS CEO Leslie Moonves to sell CBS as a single channel, rather than part of a package, a move Moonves dismissed as an empty gesture.

Time Warner Cable also said in its testimony on Thursday that it offered a new proposal for CBS to carry its signal temporarily until the two companies can hash out a new deal. It said that CBS refused the offer, and that it hopes the broadcaster reconsiders.

Aereo Inc, the online television venture backed by Barry Diller, said on Thursday it was expanding service to Dallas, one of the cities affected by the blackout.

Aereo is controversial within the industry because it pays no licensing fees to broadcasters. The TV industry is concerned that Aereo, which allows subscribers to live-stream broadcasts of TV channels, could threaten the traditional business model.

(Reporting by Liana B. Baker in New York; editing by Matthew Lewis)

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