By Liana B. Baker
(Reuters) - CBS Corp on Tuesday rejected the latest proposal by Time Warner Cable Inc to end its blackout of the TV network in major cities in a dispute over fees and dismissed it as a "public relations gesture."
Even though both sides urged a return to the negotiating table after weeks of discussions, talks seemed to have broken down, affecting more than 3 million Time Warner Cable customers in New York, Los Angeles, Dallas and other cities.
In a letter released to the media on Tuesday, CBS Chief Executive Leslie Moonves said Time Warner Cable has not reached out to him in any meaningful way to resolve the dispute over fees the cable company pays to carry the CBS broadcast network. CBS has asked for an increase in fees.
On Monday, Time Warner Cable CEO Glenn Britt made a proposal to Moonves to sell CBS as a single channel, rather than part of a package, in a letter that he also released to the media.
Moonves said he initially welcomed Britt's letter until he learned it was released to the media at the same time. "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," he said.
Time Warner Cable blacked out the network on Friday. In turn, CBS blocked online access to videos on CBS.com for Time Warner Cable broadband customers.
The blackout has deprived viewers of summer sci-fi hit "Under the Dome" and live sports, such as golf, that air on the broadcast network.
RBC Capital Markets analyst David Bank estimated that CBS currently receives $1 a month per subscriber and is seeking to double the amount.
In New York, the fracas caught the attention of mayoral candidates, including city Comptroller John Liu. He issued a letter to Mayor Michael Bloomberg on Monday asking for an emergency meeting to discuss penalties against Time Warner Cable.
Rahul Merchant, New York's chief information and innovation officer, said in a statement it would be inappropriate for the city to take sides in a dispute between two private companies.
Merchant said the city will ensure that cable customers who cancel their service receive refunds.
In Washington, U.S. Senator Edward Markey, a Democrat, urged the Federal Communications Commission to investigate CBS' denial of Web video access and help bring the parties together to settle their differences.
CBS said on Friday it would restore access to the CBS.com videos once the network is back on Time Warner Cable's TV system.
An FCC representative could not immediately be reached for comment.
Charlie Ergen, chairman of rival satellite provider Dish Network Corp, predicted on Tuesday the blackout would lead to a decline in CBS viewership by customers who drop their pay-TV service.
"They will realize they don't miss it or they discovered new programming that they didn't know existed before, or they went to the Internet and cut the cord and never came back," Ergen said on a conference call after his company reported quarterly results.
Dish has frequently taken channels off the air to gain leverage in fee battles. Last Thursday, broadcaster Raycom Media was blocked from Dish's system in a dispute that remains unresolved.
CBS said it expected minimal impact to its nationwide ratings from the standoff with Time Warner Cable. Through the first four nights, it estimated a 1 percent decline in viewership due to the blackout.
Moonves also said the cable company's offer on Monday to sell CBS channels to subscribers one-by-one on an "a la carte" basis, instead of as part of a package, was unrealistic and suggested the cable company offer its pricy regional sports network channels on the same basis.
In response to Moonves' letter, a Time Warner Cable spokesman said: "We're disappointed that they've offered no solutions," adding the offer was "sincere."
On Monday, Time Warner Cable rival Verizon FiOS said it was receiving requests for service from Time Warner Cable customers who could not watch CBS.
Shares of CBS edged down 0.1 percent to $54.00, while Time Warner Cable fell 1.9 percent to $114.26 on the New York Stock Exchange.
(Reporting by Liana B. Baker in New York and Lisa Richwine in Los Angeles; Editing by Cynthia Osterman and Prudence Crowther)
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