On Aug. 2nd, CBS-owned stations in New York, Los Angeles and Dallas went dark on Time Warner Cable systems after talks between the companies broke down. Time Warner also removed Showtime and three other cablers from lineups nationwide in the dispute.
The blackout was a result of a dispute over CBS’ request for higher fees from the cable company to retransmit CBS stations.They ended their one month battle/contract dispute, with CBS winning not only a significant financial increase for its programming,but also its stake in the digital future. The outcome should set a precedent for cable companies and their view of blackouts as a viable negotiation tool. Last month, Time Warner Cable reported a huge quarterly loss of television subscribers, the largest in its history: 306,000 of its 11.7 million subscribers dropped the company. While CBS has came out unscathed.
Harvard Law School’s Program on Negotiation published an article written by Katie Shonk entitled “The CBS – Time Warner Cable Dispute: Making a Bad BATNA Even Worse.” She discusses how the CBS/TWC standoff is a perfect example of how attempting to punish a negotiation counterpart into conceding often backfire. As Time Warner played hardball with CBS in an attempt to frighten the network into conceding, they lost focus on how the standoff would impact its customers and ultimately lose subscribers. Time Warner’s BATNA — its “best alternative to a negotiated agreement” with CBS — was a bad one from the start.
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