AT&T chairman and CEO Randall Stephenson told analysts yesterday (July 24) that he was confident the phone company could reach a retransmission consent deal with CBS, saying on its Q2 earnings conference call that parties weren’t far apart on the rate aspect of the deal. But in the wake of those comments, sources familiar with CBS said the two may be closer on the rate aspect of a deal, but are still distant concerning key portions of an overall agreement.
Stephenson said Wednesday that as far as CBS talks go, the two were closing in on a compromise regarding rates, but managed to throw in a minor dig at the broadcaster, claiming it has yet to hear a response from a proposal it submitted July 19.
“...it’s been crickets, we haven’t heard anything,” Stephenson said on the call. Later he said he was optimistic that a deal could be reached.
“Hopefully we’ll just get them back to the table and get this thing closed,” Stephenson said.
CBS officially said that it is open to negotiating with AT&T, and its offer of a 30-day extension -- which it claimed AT&T rejected and AT&T says is too onerous -- is still on the table. CBS said AT&T did offer up a 6-day extension proposal on July 19 that was loaded with conditions it could not accept. In addition, CBS claims that viewer feedback has been “significant,” with more than 250,000 calls placed to 1-855-5-KEEP-CBS to demand that AT&T continue to carry the stations and social posts about the blackout reaching a potential audience of nearly 35 million people.
But privately, sources familiar with the company say the two are far apart regarding critical aspects of the deal, like guaranteed subscriber minimums, stacking of full seasons of programs on demand and the unfettered ability to sell CBS’s streaming service, CBS All Access to its customers. AT&T has mentioned CBS All Access and stacking before, demands the broadcaster is resisting, but the assertion that it won’t guarantee that 100% of its subs will get CBS is something new.
To some, AT&T’s refusal to guarantee that a broadcaster would reach all of its subscribers suggests that it may be considering placing the broadcast network on a tier. To others, it may mean that AT&T is not guaranteeing customers that have already managed to get broadcast networks off-air or by other means on their own.
Either way, it has to be worked out.
Getting 100% carriage would be important for CBS because anything less would mean less retrans fees -- which are paid on a monthly per-subscriber basis -- and ad revenue, which in part is based on a network’s reach.
“CBS’s economics rely on 100% penetration across all products,” the person said.
AT&T officials did not immediately return a call for comment.
But CBS and AT&T should be heartened by the fact that they are at least close on retrans pricing, which the person familiar with CBS said is 90% of the agreement. Finding a common ground on that remaining 10% will be the priority of executives on both sides of the negotiating table.
In the meantime, CBS continues to remind AT&T customers the programming they are missing, including PGA Tour programming like The FedEx St. Jude Invitational on July 27-28, the Wyndham Championship on Aug. 3 on CBS Sports and NFL pre-season football beginning Aug. 10 on its local stations.
CBS said AT&T customers can continue to receive its programming by switching pay TV providers or subscribing to CBS All Access. More information is available at KeepCBS.com.
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