CBS vs. Time Warner Cable: The latest

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The image of the annoying cable guy is seared into our collective conscience – so it stands to reason that most people who look upon Time Warner Cable’s decision to drop CBS last week is yet another example of how maddening the subscriber-based system can be. Not helping matters is how convoluted the dispute is – what’s a retransmission fee anyway? – and why 3 million customers should have to live without Dexter or Under the Dome because TWC is supposedly undervaluing CBS programming.

You decide whether CBS has a leg to stand on: multiple reports say the broadcast company is asking for a subscriber increase from $1 to about $2. Since cable customers pay more than $5 for ESPN (which doesn’t air a full lineup of pricey programming like the Masters, The Big Bang Theory, the Grammys, or the NCAA Tournament), is somewhere in the vicinity of $2 too much to ask?

Apparently so, says TWC – which argues that CBS programming is still free over the air to homes (especially inhabited by those savvy folks who use antennas to stream broadcast content over their computers). “When you can get something for free,” Time Warner Cable Chief Operating Officer Robert Marcus told the Los Angeles Times, “it doesn’t merit the same level of value as something you can only get by subscribing.” (Maybe so, but there is this response from Analyst David Bank from RBC Capital Market, who told the New York Times, “It’s almost irrelevant to be available over the air. Nobody watches television that way anymore.”)

From there, Marcus also started talking about making CBS available a la carte  – which then mushroomed into a theoretical discussion about the benefits of giving subscribers the freedom to dump nonessential channels like G4, GSN, BET and CMT.

Let’s nip that crazy talk in the bud: while a cable box that only transmits the likes of Homeland, Catfish, Say Yes to the Dress, Big Brother and Game of Thrones sounds like a little slice of heaven, it’s not only hooey but wildly unrealistic. Customers would end up paying more for less, analysts say – especially since customers pay less for more (no matter how exorbitant your cable bill seems these days). While ESPN is by far the priciest, other cable nets shake out to costing far less per subscriber: among the top 10 most expensive cable nets per subscriber, SNL Kagan tells EW that ESPN is at the top at $5.54, while NFL Network is $1.34, TNT is $1.24, Disney Channel is $1.15, Fox News is 94 cents, USA is 71 cents, CNN is 60 cents and 51 cents. Perhaps that is why Time Warner CEO Jeff Bewkes said today that it makes more sense for cable companies to offer smaller bundles of networks rather than peddle them individually.

Sadly, there is no end in sight for the dispute, especially at a time when the stakes are lower (and the first NFL game of the regular season isn’t set to air on CBS until Sept. 8). But the war of words continued Wednesday with CBS offering this missive about TWC and what it’s doing in Los Angeles with the Dodgers and Lakers:

 In Los Angeles, TWC is on the other side of the table in terms of rights fees. Here are the facts that many don’t know about their fight for the consumer…Half of LA Lakers games used to be on free over-the-air TV before TWC outbid everyone for the rights for $3 billion. TWC then created a Lakers channel charging subscribers $4/month whether they watch the games or not. This works out to $49 per subscriber for 52 exclusive games this year, or nearly $1/game. TWC followed this up by paying nearly $8 billion for rights to the LA Dodgers. And next season the Dodgers will reportedly also move from free over-the-air TV to a newly created TWC Dodgers channel that by industry estimates will cost even more than $4 per subscriber per month. Neither the Lakers nor Dodgers TWC channels are available to consumers on an a la carte basis.

Here is how TWC responded:

We invested in the Lakers and Dodgers to cut out the expensive middleman and save our customers money in the long run. Since CBS O&O KCAL was, in fact, that middleman, it’s no surprise they disagree with our actions. We do find it ironic, however, that CBS would question moving sports off of broadcast, when they themselves announced in May that they were moving the Final Four to cable. Customers, however, clearly like it: with the Lakers on TWC SportsNet, ratings are strong, and we just won six Emmy Awards last weekend.

Well that settles … that?


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