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CBS Reaches HDTV Deal with Cable

February 26, 2007 | Author: Ibex Marketing

You subscribe to a cable service. You expect that you’ll get your local television stations as part of that service. If you are paying extra for digital cable with HDTV service, you might expect to get the local HDTV broadcasts as well. And you might well be wrong. As we saw in the days leading up to the SuperBowl, owners of local television stations were insisting on getting a piece of the action from the cable subscriber fees. Cable companies pay the producers of the cable-only channels for their content, so why shouldn’t the local television stations get something as well?

It appears that some cable companies are willing to accept the stations’ argument. Last week, there was a major announcement on this front as CBS reached agreements with nine different cable operators. The deal gives the cable services the right to rebroadcast analog and digital programming, including HDTV content, from stations owned and operated by CBS. According to CBS, these are long-term agreements, and among the nine cable companies are several with more than a million subscribers each.

The networks that broadcast over the air in local markets have a huge investment in the content that they produce. As video recorders and other factors threaten the traditional advertising revenue, these networks and stations are going to have to explore new revenue sources. Deals with cable services for local retransmission is likely to become an important component in the new business models for these companies.