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How Fear of No Football Ended the CBS-Time Warner Dispute

Network had been blacked out in major markets nationwide

Football fans watching the game on TV.
Gene Chutka/Getty Images
September 4, 2013 12:55 PM ET

Late Show with David Letterman, NCIS and The Talk are one thing, but neither CBS nor Time Warner Cable could have allowed the football season to open with huge swaths of New York City, Los Angeles, Dallas, Boston and elsewhere unable to watch on television. Thus did the two cable-television giants resolve their dispute Monday over money – specifically, retransmission fees, which TWC pays to CBS per subscriber – after blacking out more than three million homes in major metro areas for all of August.

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The NFL's Sunday games begin this weekend, and there was never any chance the dispute would have lasted to that point. CBS had most of the leverage: it could have withheld all the shows, giving Time Warner Cable nothing to air in its biggest markets. But even the network’s clout wasn't strong enough to withstand football's opening day. "The advertising losses from the NFL would have been much more painful for CBS," says Frank Louthan, a managing director at Raymond James, which studies the telecom and cable industries. "And customers would have defected."

Adds Craig Moffett, a partner at MoffettNathanson, another cable-TV analyst: "It was a game of chicken, and CBS was driving the truck."

Although the blackout affected 1.1 million of New York's 7.4 million TV-viewing households, and 1.3 million out of 5.6 million households in LA, according to The Associated Press, casualties were minor because August is traditionally a slow month.

John Mayer and MGMT played to significantly diminished audiences when each performed on Letterman, and the new hit Under the Dome may have had a lower chance of catching on, but overall national ratings remained relatively steady.

Neither CBS nor TWC revealed the terms of their agreement, but the cable giant's chief executive, Glenn Britt, said in a statement: "While we certainly didn't get everything we wanted, ultimately we ended up in a much better place than when we started." Moffett, the analyst, has a different conclusion: "Who won? Of course, the content companies."

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