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Moonves Calls TWC 'Dishonest,' 'Grandstanding' - Broadcasting & Cable

Moonves Calls TWC 'Dishonest,' 'Grandstanding'

Says offer is a ‘distraction'
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CBS CEO Les Moonves, responding to an offer to return CBS'
stations to cable
, accused the MSO of being
"dishonest" and "grandstanding."

In terms that suggested the battle was growing increasingly
personal, Moonves said CBS has reviewed the letter Time Warner Cable CEO Glenn
Britt sent Aug. 5, and "we have concluded that there is not a sincere
or helpful proposal in it. It is, rather, a well-wrought distraction."

Britt's letter offered to end the blackout of CBS stations
and cable networks if CBS agreed to recently-negotiated economic terms that did
not include digital rights, or to an a la carte plan that would allow
subscribers who want CBS to pay a fee to the broadcasters.

Moonves called Time Warner Cable's description of its offer
to air under the new economics the most "egregious" part of the letter. "As I
am sure you know, we have no 'new economics' that are not intimately tied to new
'terms and conditions.' Those terms and conditions, better known as rights,
were established in 2008. That was before the introduction of the iPad. Netflix
was still doing little but mailing out DVDs. Amazon was known simply for
selling books. This doesn't even begin to account for the new entrants now
coming up the ramp who are interested in paying a fair price for the most
desirable programming." Moonves said. "What you are asking for, pure and
simple, is either to gain the right to deliver content for free that others are
paying for, or to inhibit CBS from licensing content to existing online
competitors and new companies that are now emerging. I can understand why you
might want to preserve your dominance in that venue, but bullying us into
becoming your accomplice in that effort doesn't seem fair."

Moonves also dismissed Britt's a la carte proposal, attacking
the cable operator for not being willing to go a la carte with its own sports
channels.

"Anyone familiar with the entertainment business knows that
this is an empty gesture. The economics and structure of the cable industry
have created a certain way that content is distributed and compensated. We both
know that a true a la carte universe is not one that Time Warner
Cable welcomes," he said.

"In fact, if you thought it was a good idea, why aren't you
offering your new, multi-billion-dollar Lakers and Dodgers channels to your
subscribers in Los Angeles on an a
la carte basis? Instead, your subscribers in Los
Angeles are already being charged in the neighborhood
of $4.00 for the Lakers and likely more than that for the Dodgers - both of
which you have pulled off broadcast television entirely. These charges are
added to the cost of your customers' basic monthly bill whether they want them
or not," he said. "At the same time, you find it impossible to pay far, far
less than that for the network that brings your viewers the NFL, the PGA
Championship, the Masters, the NCAA Basketball tournament, SEC
Football, plus 60 Minutes, NCIS, The Big Bang Theory, Under
the Dome
, David Letterman, the Grammys, and so much more.

"I was surprised to get your letter yesterday,
particularly since I hadn't spoken to you in more than a week. Come to think of
it, you haven't reached out to me personally, as I have to you on more than one
occasion, even once during this entire matter, so your communication was both
unexpected and welcome. The fact that you released it simultaneously to the
media, however, dampened my enthusiasm somewhat. It made me suspect that the document
was not, as I hoped, a sincere offer but rather a public relations gesture of
some kind. Sadly, my suspicions were more than justified. I was also surprised
and disappointed when your incoming CEO, when asked by CNBC
whether we had responded to your lengthy letter, said, 'I am not aware of CBS
having made a counterproposal or responded to our proposal in any way.' I found
this rather dishonest. After all, we had received your communication along with
the press not five minutes before airtime, as he surely must have known."

In response to Moonves' letter, Time Warner Cable said "We're disappointed that they've offered no solutions, we've offered two. Our offer was sincere and they still haven't addressed the blocking of CBS.com."

Here is the full content of Moonves' letter:


Dear Glenn:

I was surprised to get
your letter yesterday, particularly since I hadn't spoken to you in more than a
week. Come to think of it, you haven't reached out to me personally, as I have
to you on more than one occasion, even once during this entire matter, so your
communication was both unexpected and welcome. The fact that you released it
simultaneously to the media, however, dampened my enthusiasm somewhat. It made
me suspect that the document was not, as I hoped, a sincere offer but rather a
public relations gesture of some kind. Sadly, my suspicions were more than
justified. I was also surprised and disappointed when your incoming CEO, when
asked by
CNBC whether we had responded to your lengthy letter, said, "I
am not aware of CBS having made a counterproposal or responded to our proposal
in any way." I found this rather dishonest. After all, we had received your
communication along with the press not five minutes before airtime, as he
surely must have known.

Nevertheless,
I welcome this opportunity to respond to your "offer," and to run down some
other specious arguments you have made that require clarification and
correction.

First,
after reviewing your letter, we have concluded that there is not a sincere or
helpful proposal in it. It is, rather, a well-wrought distraction. Let me
remind you, Glenn, that you have in your possession more than 100 pages of our
actual proposal, with economics, terms and rights agreements contained for CBS,
Showtime and all the content vehicles under discussion. You had them well
before you dropped our programming from your service. We have never received a
mark-up or reply to anything contained in them. Last Friday, in spite of the
fact that we had offered a one-week extension to remain on the air while we
continued our discussions, you chose to take us off the air. Why? Because, as
your new CEO stated, Time Warner Cable would "have more leverage" with CBS off
the air and
our viewers deprived of our programming. Since that night, Friday at 5:00 PM, we have not heard from anybody at Time Warner Cable to
discuss anything at all, in spite of your public statements to the contrary.
Until, of course, your public letter masquerading as a private one.

That's not
negotiating. That's grandstanding.

As to
your groundbreaking "offer" to go a la carte: Anyone familiar with the
entertainment business knows that this is an empty gesture. The economics and
structure of the cable industry have created a certain way that content is
distributed and compensated. We both know that a true a
la carte universe is not
one that Time Warner Cable welcomes.

In fact,
if you thought it was a good idea, why aren't you offering your new,
multi-billion-dollar Lakers and Dodgers channels to your subscribers in
Los Angeles on an a la carte basis?
Instead, your subscribers in
Los Angeles are already being charged in the neighborhood of $4.00
for the Lakers and likely more than that for the Dodgers - both of which you
have pulled off broadcast television entirely. These charges are added to the
cost of your customers‟ basic monthly bill whether they want them or not. At
the same time, you find it impossible to pay far, far less than that for the
network that brings your viewers the NFL, the
PGA
Championship, the Masters, the NCAA Basketball tournament,
SEC
Football, plus 60 Minutes, NCIS, The Big Bang Theory, Under the Dome, David
Letterman, the Grammys, and so much more.

We view
your so-called proposal, then, as nothing more than an attempt to muddy the
water and confuse the public discussion.

Are you
really so reluctant to come to the same kind of agreement that we have struck -
without incident - with every other cable operator, telco and satellite
provider? You already pay ten networks on your channel lineup more than you
compensate CBS, all of which have far fewer viewers. What we are looking for,
have always been looking for, is fair compensation for our content. CBS is the
most popular programmer in the world. Showtime has content that is the most
sought-after in the business. Why can't you see your way clear to honestly
paying for what your customers value most?

Perhaps
the most egregious portion of your letter was at the very top, where you "agree
to resume carriage with the „new economics‟" while "employing all the other
terms and conditions of our recently expired contracts." On the surface of it,
that looks reasonable. But it's not. Clever PR, perhaps, but not genuine
negotiation. As I am sure you know, we have no "new economics" that are not
intimately tied to new "terms and conditions." Those terms and conditions,
better known as rights, were established in 2008. That was before the
introduction of the iPad. Netflix was still doing little but mailing out DVDs.
Amazon was known simply for selling books. This doesn't even begin to account
for the new entrants
now coming up the ramp who are interested in paying a fair
price for the most desirable programming. What you are asking for, pure and
simple, is either to gain the right to deliver content for free that others are
paying for, or to inhibit CBS from licensing content to existing online
competitors and new companies that are now emerging. I can understand why you
might want to preserve your dominance in that venue, but bullying us into
becoming your accomplice in that effort doesn't seem fair. Again, what we are
seeking with you is nothing more - or less - than a rights and conditions
package that every other cable, satellite and telephone company has agreed to.

Rather than engaging
in public posturing that achieves nothing but confusion and doesn't move us one
bit closer to our mutual goal, please return to the negotiating table and talk
about the real issues that separate us. We will be there waiting and hopeful.

Sincerely,

Leslie
Moonves

President and Chief Executive Officer

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