TWC to Drop CBS Channels? - Analyst Blog
July 23 2013 - 3:10PM
Zacks
The recent rift between Time Warner Cable Inc.
(TWC) and TV network giant CBS Corporation (CBS)
may cause the former to drop CBS channels from its entire network.
As a result, the cable subscribers living in New York, Los Angeles
and Dallas may face complete blackouts of CBS channels.
CBS demanded higher fees from the cable giant for renewing its
broadcasting contract, which expired last month. However, to avoid
service disruption, both parties extended the negotiation terms
until Jul 24.
According to Time Warner Cable, CBS wants to raise its
retransmission fees by nearly 600%, which will not only shoot up
the programming expenses but will also deteriorate margins for the
cable company. Such an increase in expenditure will force the
company to raise service rates, which it has done before.
The increase in rates may result in loss of subscribers for Time
Warner Cable as most low-cost video streaming companies like
Netflix, Inc. (NFLX) and Hulu are offering
services at a rate as low as $10 per month.
Meanwhile, CBS stated that except for Time Warner Cable, all other
cable, satellite and telecom companies have signed the deal with
CBS.
Last year, DIRECTV (DTV) and TV network major,
Viacom, Inc. (VIAB), differed on the issue of
programming fees. This had led to channel blackout for DIRECTV
customers. Similarly, Dish Network dumped AMC Networks channels for
the same reason.
Last year, DISH Network (DISH) dumped AMC Networks
channels from its program list as the former was demanding higher
rates from Dish Network. M
We believe that such instances will always appear between pay-TV
and Network service providers at the time of renewal of service
terms.
Currently, Time Warner Cable has a Zacks Rank #3 (Hold).
CBS CORP (CBS): Free Stock Analysis Report
DISH NETWORK CP (DISH): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis Report
VIACOM INC-B (VIAB): Free Stock Analysis Report
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