Your TV isn’t broken: CBS blacked out on DirecTV, U-Verse after deal with AT&T fails

On July 20, 1969, viewers coast to coast sat glued to televisions as Neil Armstrong and Buzz Aldrin began their descent to the lunar surface. The majority of TV sets in America that night were tuned to the 32-hour marathon of coverage provided by CBS and its marquee anchor, Walter Cronkite.

Fifty years later, some pay-TV customers trying to watch CBS may feel like they’re on the dark side of the moon.

Subscribers of DirecTV satellite and U-Verse fiber TV service, both owned by AT&T, are without CBS-owned stations in Sacramento and a handful of other major cities after talks broke down between the two media giants over how the former pays the latter for programming.

Subscribers lost access to KOVR, better known as CBS 13, as well as other channels owned and operated by CBS Corp. – such as CW 31 (KMAX) in Sacramento, KPIX channel 5 in San Francisco, KCAL channel 9 in Los Angeles and even Smithsonian Channel and CBS Sports Network.

After failing to reach a deal by 11 p.m. Pacific time Friday with CBS, AT&T Corp. lost authorization to carry the channels for its customer base of 24 million households.

“After months of negotiations, CBS is simply looking to receive fair value for its popular programming,” CBS said in a statement Saturday morning. “The DirecTV deal expiring tonight was signed in 2012 and is nowhere close to today’s fair market terms for CBS content.”

In addition, DirecTV cut signal for all CBS affiliates on its DirecTV Now app, used to stream programming on mobile devices. In all, CBS said, more than 100 media markets have lost the ability to watch its network without a workaround.

That means shows like “Big Brother,” “Good Day Sacramento,” “60 Minutes,” “CBS Sunday Morning,” and “The Late Show with Stephen Colbert,” will be unavailable for DirecTV and U-Verse customers for the foreseeable future. If the impasse drags on, Sacramento subscribers may even miss San Francisco Giants games carried on CW 31 – the next game to be shown on KMAX will be Aug. 16.

“While we continue to negotiate in good faith and hope that AT&T agrees to fair terms soon, the loss of CBS programming could last a long time,” CBS said.

For its part, AT&T says CBS has put Sacramento customers in the middle of its negotiations.

“We were willing to continue to negotiate and also offered to pay CBS an unprecedented rate increase,” said Ryan Oliver, a spokesman for AT&T. “That increase would present CBS the highest fee we currently pay to any major broadcast network group, despite the fact that CBS stations like KOVR-CBS and KMAX-CW are available free over the air.”

“In short, CBS is seeking to convert a free, publicly subsidized broadcast station into a high-cost channel while leaving cable and satellite customers holding the bag,” he said.

Retransmission fees

Blackouts are not new for pay-TV customers. This year, there have been more than 200 television blackouts compared with 165 outages in 2018, according to Oliver and the American Television Alliance, a lobbying group funded by cable and satellite providers.

At issue is the amount of money CBS and the other broadcasting giants have demanded from cable and satellite companies for carrying their signals, known as retransmission fees. Last year, television station owners collected a combined $10 billion in such fees, up nearly 5,000 percent from $200,000 in 2006, the alliance said. Even as viewership of traditional broadcasters has declined, networks have wanted more money for the carriage, according AT&T, the nation’s largest pay-TV distributor.

“The problem is that broadcasters, like CBS, demand more money for shows that their viewers – our subscribers – are watching less,” AT&T wrote to Congress on Friday. “Our customers are fed up with these tactics. They are tired of the endless cycle of price increases and blackouts.”

Likewise, CBS blamed AT&T for the impasse.

“AT&T’s willingness to deprive its customers of valuable content has become routine over the last few weeks and months, and recent negotiations have regularly resulted in carriage disputes, blackouts and popular channels being removed from their service,” CBS said in a statement.

CBS uses those fees to cover the high costs of football coverage. In 2011, CBS was awarded a nine-year extension for NFL games, including Super Bowl LIII this year and Super Bowl LVI in 2022. The majority of CBS stations are in AFC-team markets, and the deal allows its stations in Sacramento and San Francisco to be the go-to channel for Oakland Raiders games. The NFL reaped $27 billion in the the deal that included NBC and Fox, according to Forbes; and CBS’ stake was reportedly around $3 billion, up from the previous multiyear deal that cost each network around $1.93 billion.

NFL games represented 46 of the 50 most-watched TV programs in the fall, according the NFL, and had twice the average audience for primetime shows. But that foothold slipped to 15.8 million viewers for the 2018-19 season from 17.5 million viewers in 2011-12.

Still, the high football viewership gives local stations and the networks an opportunity to score big advertising dollars. A 30-second spot during football on CBS commands about $550,000, according to AdAge. That’s about five times the average cost for a similar spot during “60 Minutes,” and four times the amount for a commercial during “Survivor.”

CBS raked in more than $5 million per 30-second ad during the Super Bowl, earning an estimated $382 million for the February game. Yet, the viewership sank for the big game in which the New England Patriots beat the Los Angeles Rams. Total viewership on TV and streaming was 100.7 million, CBS said, down 5 percent from the previous year. The tepid turnout made it lowest audience for the big game in a decade.

The distributors, meanwhile, have their own struggles, hoping to hold down costs as it loses customers to lower-cost streaming services such as Netflix and Hulu. AT&T says DirecTV has lost about 1 million subscribers in the last year. Pay-TV providers face challenges from the programmers too, as CBS has on-demand subscriptions for its network shows and its premium channel Showtime.

A graphic being carried on AT&T U-Verse in lieu of CBS owned-and-operated content is seen Saturday, July 20, 2019. subscribers of DirecTV satellite and U-Verse fiber TV service, both owned by AT&T, are without CBS-owned stations in Sacramento and a handful of other major media markets after talks broke down between the two media giants over how the former pays the latter for programming. The Sacramento Bee

Programming was replaced by an onscreen graphic at around 11:15 p.m. Friday. The message, carried on U-Verse in parts of Sacramento, read, “CBS, the owner of this channel has removed it from your lineup despite our request to keep it available to you,” directing watchers to an AT&T website.

That site details the company’s dispute with CBS, as well as another national media owner, Nexstar, which owns a constellation of 171 local stations affiliated with CBS, as well as with NBC, ABC and Fox. Those channels have been off the lineup since July 3.

In all, CBS O&O’s, as they are known, include 15 CBS stations in cities such as New York, Chicago, Philadelphia, Dallas, Atlanta, Boston, Miami, Minneapolis, Denver, Seattle and Detroit. The company also operates 8 CW affiiliates, three independent stations and two MyNetwork affiliates.

Officials from KOVR, the Sacramento CBS station, were not immediately available for comment. An employee who answered the phone in the CBS 13 newsroom said he was not authorized to speak on the matter, but said the station had received several calls Saturday morning, adding it’s “been a talker, for sure.”

Both sides have said they intend to reach a deal as quickly as possible, but how long that will take remains unknown.

Two years ago, DirecTV customers lost access to KCRA, the Hearst-owned NBC affiliate on channel 3, after its parent company battled with the satellite provider for more money. Programming was restored more than a week after the contract expired and the plug was pulled. Terms of that deal were not disclosed.

In other cases of blackouts between stations and pay-TV operators, outages lasted as little as a day or as long several months. One such case in 2015, between Dish Network and Sinclair Broadcasting, resulted in subscribers missing several weeks of local programming. Another between a Texas broadcaster and DirecTV lasted five months.

“Our goal is simple: to deliver the content our customers want at a value that also makes sense to them,” Oliver said. “We continue to fight for that here and appreciate our customers’ patience.”

How to watch CBS

Ahead of the blackout, AT&T encouraged customers to use its Locast app, which streams local content from CBS and other networks to mobile devices. Both companies have promoted the use of CBS’ All Access streaming service, which costs $5.99 a month. The content is also available at cbs.com and cwtv.com.

AT&T representative Oliver says the channels remain available through its Local Channel Connector, a device that puts the stations’ “signals into the program guides of many DirecTV customers with Genie receivers.”

For those who prefer large screens, customers can dust off an old antenna to receive CBS over the air, though they will need a newer television capable of deciphering digital signals. A better bet would be to install a digital antenna to receive KOVR, KMAX and the other Sacramento-area broadcasters. The indoor antennas range in price from about $15 to $150. Some include amplifiers to boost the signal for those who live farther from a transmitter.

CBS says viewers can keep up on the latest information by visiting keepcbs.com or by calling 855-553-3722.

As a last resort, you may want to get cozy with a neighbor who has service with Comcast, Consolidated Communications or Dish.

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Daniel Hunt is The Sacramento Bee’s breaking news editor; he joined The Bee in 2013 from The Orange County Register and has worked in editing and design roles at newspapers in California and Delaware.