CBS dispute lost Time Warner Cable 306,000 subscribers

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They didn't see eye to eye. ()
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Alex Weprin

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Time Warner Cable lost 306,000 video subscribers in the last quarter, and executives at the country's second-largest cable provider blame the loss in part on the company's dispute with television network CBS in August.

Those 306,000 customers represent nearly 10 percent of those affected when a dispute over fees knocked the broadcaster off Time Warner Cable customers' channel lineup in several big cities. During a quarterly earnings call this morning, Time Warner Cable executives said that profit had dipped 34 percent as a result of the dispute.

While most cable companies have been losing some video subscribers, the 306,000 figure was significantly higher than Wall Street's estimate of 184,000.

In the dispute, Time Warner Cable dropped CBS, CBS Sports Network and Showtime from its lineup for customers in New York, Los Angeles and Dallas. CBS responded by blocking Time Warner Cable internet customers from watching CBS programs on CBS.com. There was also a separate dispute with some local stations owned by Journal Broadcasting in Wisconsin.

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“Clearly the issue this quarter was subscriber volume,” Time Warner Cable president Rob Marcus told investors on the call this morning. “The CBS and Journal disputes clearly resulted in short-term pain for us, but as I have said before the issues at stake had long-term far-reaching implications for our business.”

The CBS dispute dragged on for just over a month, with the two sides inking a new deal Sept. 3. It was not only the longest broadcast network dispute to affect the New York City market, but also the highest profile, driven by intense public relations campaigns from both companies.

The consensus among cable industry executives is that disputes with networks will only increase, as the content owners seek higher fees from cable carriers, while cable fights to restrain costs.

Despite the loss of video customers, revenue at Time Warner Cable was up 2.9 percent compared to the third quarter last year, thanks to new broadband data subscribers, and a growing business services division.

Time Warner C.E.O. Glenn Britt, who will be stepping down at the end of the year, also revealed that he has cancer and will be undergoing treatment for it. He says he still plans to step aside at the end of the year, with Marcus replacing him.