Time Warner Cable Threatens to Drop Low-Rated Networks

AMC Networks Inc. (AMCX)’s IFC and WE TV are among the networks at risk of being dropped by Time Warner Cable (TWC) Inc. now that Chief Executive Officer Glenn Britt is taking a harder line on renewing channels with low ratings.

Distribution on Time Warner Cable, the second-largest U.S. cable company, “is not a birthright,” Britt said today at a UBS AG conference in New York. Networks with low ratings should be on alert that the cable company will either move them off expanded basic packages or drop them completely, Britt said.

Time Warner Cable’s programming costs have risen about 30 percent since 2008, leading to a 15 percent increase in cable-TV prices, Britt said. The trends are unsustainable because prices are rising too quickly for many people to afford, he said.

“If you have a network that is getting hash-mark ratings and no real sign it’s going to get any better, we’re going to have a different kind of conversation than we might have had five, six or 10 years ago,” Britt said.

IFC and WE TV’s contract with Time Warner Cable is expiring soon, the New York-based cable company said last month. AMC’s two other channels, the flagship AMC network and the Sundance Channel, are covered under a separate contract and will continue to be carried on Time Warner Cable. AMC airs shows such as “Mad Men,” “The Walking Dead” and “Breaking Bad.”

‘Bridezillas,’ ’Portlandia’

WE TV, a network aimed at women, features shows such as “Bridezillas” and “Obsessed with the Dress.” IFC, originally known as the Independent Film Channel, airs “Portlandia” and R. Kelly’s “Trapped in the Closet.”

Georgia Juvelis, a spokeswoman for New York-based AMC, and Maureen Huff, a Time Warner Cable representative, declined to comment. AMC CEO Josh Sapan will speak at the same UBS conference tomorrow morning.

Shares of Time Warner Cable, which ranks second to Comcast Corp. in U.S. cable subscribers, gained 0.3 percent to $95.14 at the close in New York. The stock has climbed 50 percent this year. AMC, up 41 percent this year, rose 0.4 percent to $53 today.

Dish Network Corp. (DISH), the second-largest U.S. satellite-TV provider, also has complained about AMC’s programming costs and low ratings. It dropped AMC’s channels for more than three months before agreeing to bring them back in October as part of a lawsuit settlement with Cablevision Systems Corp. (CVC) and AMC.

Dropping low-rated networks can be a tricky decision because their owners often bundle them with higher-rated channels. That forces cable companies to pay for all of them or lose access to networks they would otherwise want to keep.

NBC Universal’s Style channel, for instance, is tied to E!, which draws higher ratings. Both networks are also up for renewal soon on Time Warner Cable, the company has said.

In an interview, Britt declined to say how Time Warner Cable would deal with this challenge.

“We’re going to have to do things where we can,” he said. “Stay tuned.”

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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