Time Warner Cable Battles CBS Over Fees

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July 22 (Bloomberg) -- Time Warner Cable is balking at renewing an agreement to carry CBS’s broadcast network on its pay-TV system because the entertainment company is asking for too much money. RBC Capital Markets Analyst David Bank speaks with Jon Erlichman on Bloomberg Television's "Bloomberg West" (Source: Bloomberg)

I think what is happening is we are rerating to an entirely new level.

Previously, a lot of those battles were fought.

I thought was, let's get to $1 sub.

We have gotten there and now we are beginning a new round of let's give it to two dollars a sub.

This idea that cbs once a 600% premium for its content.

You see a headline like that and you think it is interesting.

Is it a fair comment?

On some level there is something technically correct about it, but it is very misleading.

What the statement refers to is the existence of a number of much older agreements that had not really been marked to current market conditions, versus what cbs was asking for.

I do not think they are asking for a 600% increase over typical market value for more recent deals, but i do think there are probably some deals right now that are in existence that are at that kind of lull.

In your research, you talked about cbs having a programming budget well into the billions.

We talk about how netflix is spending money on content, how cable channels are developing these great shows, but the networks spend a lot of money, and that is what they're looking for, money back for all the money they are spending.

I would put it into more specific terms.

If you take a top-10 network like tnt, usa, fx, those are networks earning summer in the range of $1 a sub.

They typically have a budget within the 500 million to $1 billion a year.

Cbs has a budget of something like $4 billion a year.

That is really the primary difference.

Look at how much more investment and content is going in with basically no increase commoditization.

That is what the broadcasters are arguing.

At the same time, if these sites continue and the tv as threatened, you get blackouts' again.

Does that result in more people saying, forget it, i am going to netflix or hulu.

? at the end of the day, these networks have the largest audiences in the ecosystem.

They also have the sports program that you cannot substitute on netflix.

I think there is the potential for a blackout.

This text has been automatically generated. It may not be 100% accurate.


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