For a major network to be pulled from a cable channel line-up is pretty unusual, yet that’s exactly what is happening this weekend in several major cities across the US. According to USA Today, CBS will be dropped from Time Warner Cable in New York, LA, Dallas, Chicago , Boston, Pittsburgh, Denver and Detroit.
The reason for the dispute is simple – the two sides are very far apart on the price of a retransmission fee, the fee a cable operator pays the broadcaster. These dollar numbers are the most interesting part of the story, especially this statement:
“CBS gets paid about 88 cents per cable subscriber per month for retransmission rights”.
So is 88 cents in the ballpark of what CBS would charge us to subscribe to their service a la carte? The technology to migrate CBS from a cable channel to a strictly OTT channel is ready to go, e.g. Roku, Apple TV, and newcomer Chromecast.
The risky part for both players is this: TWC has 11.7 M video subscribers, and not all of them are going to make a switch requiring some new piece of hardware. Many of those 11.7M will change to another channel. But others, say people that were looking forward to watching Tiger Woods finish the weekend at the WGC Bridgestone Invitational, might get irritated and think about switching to DirecTV.
Risky business indeed. Long term fights like this could push the consumer toward cord cutting alternatives. That might be a win for the consumer. TWC and CBS would lose millions. What are they thinking?
Update 8-23-13: TWC handing out free basic antennas.