September 5, 2013
After a month of haggling, snarking, and outright marketing war, CBS and Time Warner came to terms. While details were not disclosed (though this CNBC article has some intriguing hints) both CEOs — Les Moonves at CBS and Glenn Britt at Time Warner — had soothing words about how this agreement is good for everyone.
I think the winner is the future of online viewing.
Digital rights were the second biggest sticking point (after a roughly tripling of retransmission fees that CBS initially sought). Time Warner wanted a continuation of the 2008 contract, which gave them digital rights as part of the contract; CBS wanted a separate payment. In other words, in 2008, no one thought digital amounted to anything so CBS threw them in at no cost. Now both sides see enough value that they become worth arguing over. And by retaining digital rights, CBS is free to pursue that value by licensing its content to other services like Netflix, Amazon Prime, and is rumored to be talking to Sony for its yet-to-be-announced video service.
Prior to this agreement, CBS had no incentive to think about digital distribution because they had signed away the rights; Time Warner had little incentive because they didn't pay anything for those rights. They have dabbled with TV anywhere, but it was a sideshow to their real business of cable delivery of video.
Now that digital rights have a monetary value, I expect content owners like CBS to put a lot more thought and creativity into how to monetize them. And as distributors pay for those rights — whether traditional cable/satellite companies or new online streaming services — they will definitely have to have a strategy to generate revenue to cover their cost. In both cases, I expect the ability to access shows online to become more ubiquitous and easier.
This deal is yet another in a string of cascading changes hitting the TV industry this summer. With online viewing unbundled from a cable or satellite subscription, the doors to greater disruption of the TV industry have just opened even wider.