CBS Corp. and AT&T's U-Verse have reached an agreement that
will keep the broadcast network's local television stations and its
premium cable channel Showtime on the pay-TV distributor's
systems.
The previous deal expired Tuesday and both sides negotiated
through the night to avert a blackout that would have left about
2.5 million of U-Verse's six million subscribers without CBS.
Several million more would have lost Showtime.
Terms of the new agreement weren't disclosed. According to
industry consulting firm SNL Kagan, CBS-owned TV stations currently
average monthly carriage fees of $1.30 per subscriber. In other
negotiations with distributors, CBS has sought deals that would
lift its fees to the $2 per subscriber range over the next several
years. CBS has told investors that by 2020 it expects to reach $2
billion in revenue from pay-TV distributors as well as fees from
its own affiliates in return for carrying its programming.
As part of the new pact, U-Verse will in 2016 start to carry
Pop, the pop culture cable channel CBS co-owns with Lions Gate
Entertainment Corp. U-Verse will also continue to carry the CBS
Sports Network and its Smithsonian Channel.
CBS and U-Verse started negotiations in March but talks only
heated up in recent weeks. Earlier in June, CBS had expressed
frustration at what it saw as reluctance by U-Verse to move talks
past the preliminary phase because it was more focused on its $49
billion acquisition of satellite broadcaster DirecTV. AT&T
countered that talks were progressing and a contract would be
signed before the deadline.
AT&T had indicated it was optimistic about getting
government approval and closing the DirecTV purchase before the end
of June. But earlier this week, AT&T extended the merger
agreement while it tries to finalize regulatory signoff. DirecTV
has over 20 million subscribers, and when AT&T announced the
acquisition, one of the reasons cited was the leverage it would
provide when negotiating with programmers.
The negotiations came at a time when distributors such as
U-Verse are concerned that rising programming costs will lead
subscribers to cut the cord in favor of alternatives such as Hulu
and Netflix. CBS also has its own so-called over-the-top service
that costs $5.99 a month but doesn't include the broadcaster's
coverage of the National Football League.
Write to Joe Flint at joe.flint@wsj.com
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