Top Business Negotiations of 2013: Time Warner versus CBS

By — on / Business Negotiations

On October 31, 2013, Time Warner Cable reported a huge quarterly loss of television subscribers, the largest in its history: 306,000 of its 11.7 million subscribers had dropped the company, the New York Times reports. The bad news has been attributed largely to an impasse with television network CBS over fees, which led to Time Warner blacking CBS out of millions of homes in New York, Los Angeles, and Dallas for a month during the summer of 2013.

The parties’ ultimate agreement was viewed as a victory for CBS, which won a promise of significantly higher fees for its programming in the blacked-out cities, from about $1 per subscriber to $2, as well as the digital rights to sell its content to Web-based distributors such as Netflix. Time Warner halted the blackout and conceded in large part because it feared a mass exodus of subscribers if the dispute interrupted the start of Monday night football on CBS.

Time Warner’s disappointing news highlights why attempts to punish a negotiation counterpart into conceding often backfire. Time Warner’s focus on the pain it was inflicting on CBS blinded it to likelihood that it would suffer from the blackout at least as much. Rather than spurring agreement, such hardball tactics tend to escalate disputes and drive parties even farther apart.

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