Time Warner Cable pulls back from CBS blackout for now

By Liana B. Baker and Lisa Richwine

(Reuters) - Time Warner Cable agreed on Tuesday to keep the CBS network on the air in New York and other cities after initially announcing a blackout when the two sides failed to reach an agreement on fees.

Negotiations between CBS and Time Warner Cable continued after midnight in New York, according to a spokeswoman for the cable operator. Time Warner said it had relented "at the request of CBS."

"There's progress being made and hopefully we don't go dark," CBS CEO Leslie Moonves told reporters on Monday night in Los Angeles.

"We still believe our content is worth a lot of money."

CBS, which is the No. 1 rated U.S. broadcast network with shows such as "The Big Bang Theory" and "N.C.I.S.," has never had a wide-scale blackout, it said.

A blackout would have blocked an estimated 3.5 million Time Warner cable subscribers in cities such as New York, Los Angeles and Dallas from seeing shows like "Under the Dome" and "Big Brother." It would not affect CBS affiliate stations owned by other companies.

Initially, in a statement issued just after midnight, Time Warner said it would remove CBS and the company's cable channels, including the premium service Showtime. The action came after weeks of often contentious negotiations over increases in fees that CBS receives from cable and satellite operators.

"We offered to pay reasonable increases, but CBS's demands are out of line and unfair," Time Warner said in its initial statement. "They want Time Warner Cable to pay more than others pay for the same programming."

The threat of blackouts have become increasingly common as networks, which provide programming, square off against cable and satellite TV operators that pay retransmission fees to transmit programs into living rooms around the country.

Last summer, satellite operator DirecTV's 20 million customers were unable to receive Viacom's cable networks, including Nickelodeon and MTV, for 10 days after those companies failed to strike a new deal.

CBS's contract with Time Warner Cable expired in June, but the two sides have already extended the deadline twice. The two sides were agreeing hourly extensions as talks continue.

While the companies negotiated, they both ran TV commercials aimed at getting the public on their side.

Time Warner Cable's spot accused CBS of giving New York a "black eye", while CBS urged viewers to "say no to Time Warner Cable," and gave them Time Warner Cable's phone number.

The loss of advertising dollars would be somewhat less painful for CBS during the summer, when networks air mostly reruns and audience numbers drop. But if a blackout persisted into August, CBS could lose audiences in the some of the nation's largest markets for its reliably popular National Football League games.

"If there was a time for this dispute to occur, it would be in the late summer," said Morningstar analyst Michael Corty.

Time Warner Cable reminded subscribers in New York that they sign up to receive CBS from media mogul Barry Diller's Aereo TV service, which streams over the air broadcast signals to a tablet or computer for $8 a month. Aereo pays CBS no fees.

(Reporting by Liana B. Baker in New York, Lisa Richwine and Ronald Grover in Los Angeles and Sakthi Prasad in Bangalore; Editing by Edwina Gibbs and Patrick Graham)