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Time Warner Cable yesterday reported the worst quarterly loss of television subscribers ever - and has partially blamed it on the massive battle it began with the CBS Corporation in August over carriage fees that ended last month.. After the third quarter results were published, Time Warner Cable had dropped 306,000 of its 11.7 million TV subscribers in three months — a loss even worse than the company had forecast.
From the New York Times:
The results underscored, to a degree rarely seen before, the damage that can be done when distributors and programmers publicly feud over contracts. They also offer vivid evidence that content has the upper hand in disputes with distributors.
The disappointing quarter comes amid continued questions about the short- and long-term health of cable television amid ever more serious competition from Internet streaming services. The incumbents have held up remarkably well — only a small fraction of American homes have stopped paying for monthly TV subscriptions in the last few years.
Thursday’s results suggest that self-inflicted wounds like the CBS blackout are just as serious a threat to cable and satellite companies, at least now. Consumers who are displeased with their TV provider are suddenly motivated to switch when their favorite shows are taken away.
A vast majority of contract negotiations between programmers and distributors, even the hard-fought ones, end peacefully. But some industry officials say the number of blackouts has increased as distributors hold the line against deep price increases. A major contract between the Walt Disney Company and Dish Network expired at the end of September, and the two sides still have not reached a new deal, though they have averted any interruption in programming by agreeing to short-term extensions.
In the CBS fight, more than 3 million TW Cable customers lost access to CBS-owned stations in New York, L.A., Dallas and other markets, and the cable operator dropped Showtime and three other cable nets across the U.S. The networks went off the air Aug. 2; the companies announced an agreement resolving the standoff on Sept. 2.
Time Warner Cable, the second-biggest U.S. cable operator after Comcast, had 11.41 million video, 11.05 million broadband and 4.81 million voice residential customers. The operator added 14,000 business services customers, with 606,000 customer relationships at the end of June.
From the Gothamist:
But no. Time Warner will be just fine. Despite the loss of TV subscribers (there are 11.7 million of them) the company's profits rose 2.9% last quarter. They will continue to fight with broadcasters because such fights are necessary when you are a comfortable monopoly. Broadband revenue is up up up because grinding your teeth is more painful than opening your wallet.
And yes, they will raise fees some more (they do not hide this!). You will protest the disappearance of your red stapler but you will not burn down the building.