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CBS chief: Time Warner face-off is 'a crucial struggle'

After both sides trade barbs in ad campaigns, CBS's Les Moonves says the dispute has escalated in recent days and the threat of Time Warner dropping stations is real, according to an internal email memo.

CBS Corp. CEO Les Moonves
CBS Corp. CEO Les Moonves attends the CBS 2013 Upfront Presentation on May 15, 2013, in New York.
Ben Gabbe/Getty Images

CBS Corp.'s face-off with Time Warner Cable has the broadcaster's chief executive weighing in.

Les Moonves, the chief executive of CBS Corp., said in an internal email that Time Warner Cable has the ability to pay more for the broadcaster's flagship channel, which it deserves because of highly popular programs. He added that the dispute has escalated over the past few days and the possibility that Time Warner Cable is going to drop CBS stations is a "very real threat."

"If on Thursday our content has been pulled off their service, you'll know that we are in the midst of a crucial struggle we intend to bring to a satisfactory conclusion," Moonves says at the letter's conclusion.

CBS Corp., which is the parent company of CNET, has been negotiating a new carriage pact with Time Warner for its flagship network under an extension to their previous agreement that expired June 30. They must come to terms on retransmission fees -- how much TWC pays CBS to carry the channel for its subscribers -- by 5 p.m. ET Wednesday or customers in New York, Los Angeles, and Dallas could lose that station, as well as CBS-owned Showtime possibly.

It's an example of how carriage disputes between broadcasters and distributors are intensifying. The networks' desire to increase a lucrative stream of revenue -- retransmission fees -- clashes with pay-TV providers' need to tamp down subscriber rates to discourage cord cutting, when customers turn to cheaper online options like Netflix that bypass the cable box.

In his letter Tuesday, Moonves said the company's flagship network has some of the highest-rated programming on television but receives less in fees that less-watched cable networks.

"Networks that are watched by audiences much smaller than that of our lowest-rated shows are receiving much more compensation," he said. Moonves also said Time Warner has the money to pay CBS "a fair rate" without passing along cost to customers and has refused a deadline extension.

Time Warner Cable spokeswoman Maureen Huff reiterated that Time Warner hasn't refused an extension but is instead focused on reaching an agreement before the extension expires. Time Warner bases its programming decisions on a variety of factors and is willing to pay for CBS, having offered significant fees, she said.

For now, both sides agree on one thing: Both Moonves and Time Warner says they'll continue to negotiate.