Time Warner Cable is the Loser in its Battle Against CBS

The cable giant lost 300,00 TV-service subscribers in the latest quarter

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It turns out that CBS was right when it warned Time Warner Cable (TWC) that not carrying its programming—which include Showtime and the Smithsonian Channel—would hurt the cable giant more than the network.

During tense month-long standoff last summer—in which TWC balked at paying the rates CBS was asking for its content—about three million cable customers lost all access to CBS programming, including in high-density markets such as Los Angeles, New York and Dallas. In the third quarter of 2013, TWC reported that it lost some 300,000 cable subscribers, perhaps as much as half of those losses attributable to the blackout.

In the end, TWC blinked first, scared that customers missing out on the premiers of CBS’ fall slate and plenty of NFL and SEC football would prove more crippling than the toll the standoff had already created. But even before viewers lost out on their favorite shows, TWC took a hit, according to Business Week.

TWC’s profit dropped 34% in the most recent quarter, but the stock still has a reported earnings per share of $1.69. The shares are up, even if revenues came in just shy of projections, largely due of the video customer drop. A gain, though, in business services revenue helped offset the video losses.

TWC eventually caved to CBS—reportedly paying a heftier fee than it had previously, but still not quite as high as CBS originally demanded—and restored all things CBS, including Price is Right!, to its customers.

Craig Moffett, analyst for MoffetNathanson, wrote that this scuffle between TWC and CBS may have plenty of further ramifications for other cable companies and networks squabbling over carriage fees, the rights paid to networks to host their feeds.

“Every cable operator now goes to the table knowing that CBS not only won the war, but left TWC badly damaged for having fought the fight,” he says.

Despite dropping customers, TWC says putting up a stink at least gave them a better deal in the long run. This little skirmish may be the first we see in a long line of disputes that will not only test cable companies and their resolve to stand against network television, but also in seeing just how much Americans love the networks.

1 comments
timeserf
timeserf

Cable companies are evil anyway; I have Comcast and enjoyed a great deal for an absurd amount of channels for a good deal for a year; both due to the overwhelming number of channels and the high non-promotion cost of the package,  I looked forward to scaling way back and saving a few bucks each month when the promotion ended.

 I discovered both that this unwanted package went up $25/month and was still less than the cost of  package with far less than one-half of the channels,  My only other option is to return to the dark days of the early 80s in which I can get my broadcast channels and a couple of  very very basic channels for roughly $30.

Speaking of the dark days, the cable companies are forcing us back into the era of requiring that we use a decoder device for every signal, not even just every set, that we use. Of course, we must pay a rental fee for each device despite already paying well over $1,000/year to get channels.

 The added insult to this injury is requiring everyone to buy numerous channels that we do not want despite promises of specialized bundles dating back to said '80s. I do not want the roughly 30 sports channels in my package any more than sports fan want the channels that provide me silly kids programming.

 I seriously hope that the next fee hike prompts me to join the millions of folks who junk cable altogether.