TWC to Compensate for CBS Blackout - Analyst Blog


The recent rift between Time Warner Cable Inc. ( TWC ) and TV network giant, CBS Corporation ( CBS ) has resulted in a complete blackout of CBS channels in New York, Los Angeles and Dallas. In order to compensate the service disruption, TWC will offer the US Open Tennis Championship Series for free on Tennis Channel.

The subscribers can watch 200 live matches of the series from Aug 26 till Sep 9. Moreover, the final game can be viewed for free on Google Inc. 's ( GOOG ) Android-based smartphones and iPhones through the US Open Live applications.

The recent demand for higher service renewal fees by CBS has caused Time Warner Cable to drop its channels from the former's list.

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 Time Warner Cable to charge higher rates from its subscribers.

In the beginning of fiscal 2013, Time Warner Cable hiked its service rates. In the recently concluded second quarter of 2013, Time Warner Cable lost 191,000 residential video subscribers. Hence, it believes that any further increase in rates may result in huge subscriber loss 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.

Currently, Time Warner Cable has a Zacks Rank #3 (Hold).

CBS CORP (CBS): Free Stock Analysis Report

GOOGLE INC-CL A (GOOG): Free Stock Analysis Report

NETFLIX INC (NFLX): Free Stock Analysis Report

TIME WARNER CAB (TWC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CBS , GOOG , NFLX , TWC

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