AT&T customers lose CBS because of contract dispute

CBS, the nation’s most-watched television network, went dark for more than 6.5 million AT&T customers early Saturday after the two media giants couldn’t agree on a new contract.

The network, with hits like “Big Brother,” and Stephen Colbert’s “Late Show,” was cut off from AT&T’s satellite service DirecTV as well as the landline-delivered U-verse and DirecTV Now, the live streaming product.

The companies had been negotiating for several weeks but failed to agree on pricing and streaming rights before the contract expired Saturday at 2 a.m. Eastern time.

In a statement, CBS said it “made every effort to avoid this blackout,” but that it wouldn’t agree to terms that “undervalue our hit programming.”

AT&T called CBS a “repeat blackout offender” and said the network had been demanding “unprecedented increases” in the fees it charges.

AT&T television customers in at least 14 markets, including New York, Los Angeles, Chicago and San Francisco, lost their feeds to CBS. The network is carried in about 119 million homes across the country, either on a pay television service or free over the air. The affected customers account for tens of millions of dollars in monthly revenue to CBS.

Broadcasters like CBS receive what’s known as retransmission consent fees — the equivalent of a monthly licensing fee — from distributors like DirecTV. CBS is asking for an increase over the rate it last negotiated in 2012, when market conditions were different and pay-television bills were cheaper.

Since CBS is a broadcast network, it’s still free to watch over the air using an antenna. But it and other broadcasters also sell their rights to pay-TV operators like AT&T, which carry the network on their systems. Of the 119 million homes that get the channel, about 90 million get it through a pay service, representing billions of dollars a year in licensing fees.

CBS had been paid an average of a little over $2 for each AT&T subscriber every month, and it is now seeking a fee in the range of $3, three people familiar with the matter said. AT&T, in addition to a smaller fee increase, is pushing for the ability to sell CBS’ streaming service as a separate option.