Here’s Why Congress Won’t Step Into the Time Warner-CBS Mess


When Time Warner Cable (NYSE:TWC) and CBS Corp. (NYSE:CBS) couldn’t settle their broadcasting drama on their own, Time Warner wanted to call in the big guns to help settle the issue, but the Federal Communications Commission refusedBloomberg reports.

It’s little wonder that Time Warner requested that the FCC intervene, as its dispute with CBS has forced the second-largest cable provider to temporarily pull the plug on the most-watched TV network, blocking millions of viewers in large cities from watching their beloved prime-time shows and highly anticipated sporting events.

As the fee dispute continues into its fifth day and customers become more and more disgruntled, the network is worried that an end may not be in sight, and that could mean damning things for its consumer base.

But despite consumer frustration and the two companies’ evident inability to reach an agreement, Bloomberg reports that the FCC as well as members of Congress are standing firm in their decision not to get involved with the dispute, other than issuing statements that urge the two parties to find a compromise sooner rather than later.

There are several reasons behind their logic, and one of them is the basic fact that the FCC simply doesn’t have the power to intervene on the matter. Another is that neither the agency nor members of Congress want to take a side in the dispute — issuing certain statements would diminish CBS’s bargaining position, and that would be a dangerous path for Congress to take because broadcasters have so much influence when it comes to lobbying at election time.

Bloomberg explains that $26.6 million was spent on commercial television and radio station broadcasting for Washington lobbying in 2012, and the broadcasting sector also gave $11.6 million in campaign contributions for last year’s federal elections. Choosing a side is then basically a lose-lose situation for lawmakers, as both broadcasters and cable providers prove to be potent forces when election time comes around, and no one wants to risk any lingering resentment.

James Gattuso, a senior fellow in regulatory policy for the Heritage Foundation, said to Bloomberg: “You open a can of worms if you start stepping up on behalf of a network, or on behalf of a cable provider. It just politically is a no-win situation.”

So both the FCC and Congress have decided to remain hands off, though Neil Grace, an FCC spokesman, offered this to the publication: “The commission is disappointed that the respective parties could not reach a transmission agreement. We urge all parties involved to resolve this situation as soon as possible.”

Still, that probably isn’t exactly what Time Warner was going for. Both parties, then, need to return to the negotiating table on their own terms and without the hand of the FCC pushing them along.

The fee dispute began on Friday, and since then, the CBS channel has remained black for Time Warner customers due to disagreement over retransmission fees, or the fees pay-TV providers pay media companies to broadcast their programming. In the case of CBS and Time Warner, CBS has asked for an increase from about $1 per subscriber to about $2.

Time Warner has not only refuted the cost but also warned that the higher price would have to be passed on to customers, according to what analysts told CNBC. This comes at a time when cable companies are already upping their prices, so if companies like CBS and Time Warner aren’t careful, they could drive consumers to cheaper online streaming options.

Don’t Miss: There’s No Magic in Disney’s Third-Quarter Earnings.