Business & Economy

Subscribers blame Time Warner Cable for CBS, Showtime blackout (complaint PDF)

Time Warner Cable and CBS Corp. continue to fight.
Time Warner Cable and CBS Corp. continue to fight.
Kevork Djansezian/Getty Images

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Three Los Angeles-area Time Warner Cable subscribers are taking their anger over the cable company’s dispute with CBS to court.   They filed a lawsuit saying they should be paid back for losing access to CBS and Showtime during a black out of those channels. It's been two weeks since the channels were removed from Time Warner Cable (TWC) systems in New York, L.A. and Dallas. 

James Armstrong, Michael Pourtemour of Hermosa Beach and Vatsana Bilavarn of Van Nuys filed the complaint Wednesday in Los Angeles Superior Court on Wednesday. The three seek class action status for the case.

The complaint said Armstrong and Portemour would not have subscribed to TWC if they had known CBS and Showtime weren’t available, or “if they had been advised there was a possibility there would be a blackout of this programming" and Bilavarn would not have subscribed “if she had been advised that free channels would not be part of the subscription services."

Time Warner Cable declined to comment directly on the lawsuit.

“Customers who currently pay for Showtime or The Movie Channel should see a credit for those channels in an upcoming bill," said Dennis Johnson, a Time Warner Cable spokesman.  "The credit will be retroactive back to the first day of the Showtime/TMC blackout."

As for CBS, TWC said it’s part of a programming package which changes, with channels coming on and being dropped from time to time.

“We do not make it a policy to credit customers for any individual channel change, because the whole package continues to provide value,” Johnson said. 
The lawsuit is another indication that Time Warner Cable customers are blaming the cable company for the black-out, and not CBS.  After all, those customers aren’t paying CBS monthly for a service: they’re paying TWC.  

“Consumers are clearly upset that they can’t get the programming that they want to watch,” said Rich Greenfield, Media and Technology analyst with BTIG in New York. 

Greenfield said their anger is misdirected.  He said Congress passed the law which established the negotiation process that CBS and Time Warner Cable are locked in 20 years ago, when the media business was very different.

“What consumers should really be upset about is that Congress and legislation has not kept up with the change in the media landscape,” Greenfield said.  

CBS and Time Warner Cable are battling over the fees the cable provider must pay the network to carry its channels in local markets.  The industry term is for the negotiations is "retransmission consent."

CBS has openly said it wants to earn more money from the retransmission fees.  Time Warner Cable has said it’s willing to pay more, but that CBS is asking too much.

Greenfield of BTIG says Time Warner Cable has a point. 

“Retransmission consent in 1992 was all about funding local news and information,” Greenfield said.  “I think this is Time Warner Cable saying ‘the retransmission process is clearly broken, if we say ‘yes’ here, it’s going to start a whole wave of major price increases on consumers, impacting their bills.” 

But customers who just want to watch KCBS, KCAL and Showtime still point their fingers at TWC. The company's reputation for retransmission disputes and blackouts has driven some customers away.

"We didn't even consider Time Warner Cable as an option because we knew about that kind of stuff," said Bill Willis, who lives in downtown L.A.

He's lived in other U.S. cities and  had friends who lost channels on Time Warner Cable.  He now lives in an apartment building with his wife Suzanne. Some tenants subscribe to Time Warner Cable while others, including Willis, picked AT&T's U-verse.    

"If we're spending $100-plus a month on entertainment and Internet, we're going to go with a provider who's going to meet our needs," Willis said.  "From our standpoint, Time Warner Cable just wasn't able to meet our needs."

Time Warner Cable class action complaint