CBS blackout prompts calls for regulatory changes

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The American Cable Association, a lobby group for small cable providers, urged Congress and the FCC to adopt rules "that prevent consumers from losing access to programming during these disputes."

Time Warner Cable and CBS were unable to reach an agreement for how much the cable company should pay to carry the network. As a result, Time Warner customers in New York, Los Angeles and Dallas lost access to CBS beginning on Friday night.

The companies have accused each other of being unreasonable and forcing the blackout. 

Many cable industry officials argue that because broadcasters are granted the right to use the airwaves in the public interest, the government should limit their ability to pull their channels from cable providers.

But broadcasters argue that they are only seeking fair compensation for their content and that retransmission fees are not the cause of rising cable bills.

In Time Warner's letter to the FCC, the cable provider argued that media companies should be barred from bundling their broadcast stations with cable channels, forcing cable providers to pay for channels that they wouldn't otherwise offer.

Time Warner also urged Congress to enact legislation to strip broadcasters of various regulatory benefits if they black out their channels.

Alternatively, Time Warner said that if the current regulatory benefits remain in place, the FCC should adopt new rules to allow cable companies to continue carrying broadcast stations even after negotiations break down.

Neil Grace, an FCC spokesman, said the commission is "disappointed" that the companies were unable to reach an agreement. 

"Our primary concern remains with consumers and viewers in the affected markets. We urge all parties involved to resolve this situation as soon as possible,” Grace said. 

CBS has come under particular criticism for blocking access to its online video for Time Warner broadband subscribers.

"Regardless of the other issues between us, it is surely beyond the pale for you to subject these Internet customers to blocking of content that is made available for free to all others," Time Warner CEO Glenn Britt wrote in a letter to CBS on Tuesday.

He noted that the Internet blackout affects customers in cities that still carry CBS and who do not even subscribe to Time Warner for TV service.

Harold Feld, vice president for consumer advocacy group Public Knowledge, said that by blacking out Internet content, CBS "crossed the line from hardball tactics to outright abuse of consumers."

He urged Congress and the FCC to step in to prevent similar actions in future negotiations. 

"Congress never intended that broadcasters violate their duty as trustees of the public airwaves by using consumers as pawns in commercial disputes," Feld said.

In a letter responding to Time Warner on Tuesday, CBS CEO Leslie Moonves accused the cable provider of "grandstanding" and "bullying."

He said that CBS offered to allow Time Warner to continue carrying its channels for an additional week during negotiations, but that the cable company refused.

"What we are looking for, have always been looking for, is fair compensation for our content. CBS is the most popular programmer in the world. Showtime has content that is the most sought-after in the business," Moonves wrote. "Why can't you see your way clear to honestly paying for what your customers value most?"