The recent rift between
Time Warner Cable Inc.
) and TV network giant
) 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
CBS CORP (CBS): Free Stock Analysis Report
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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
) and Hulu are offering services at a rate as low as $10 per
Meanwhile, CBS stated that except for Time Warner Cable, all
other cable, satellite and telecom companies have signed the deal
) and TV network major,
), 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.
) 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
Currently, Time Warner Cable has a Zacks Rank #3 (Hold).