Aug. 5 - Time Warner Cable is offering to end its CBS blackout- and let CBS go a la carte- a move that could change the balance of power in the TV business. Bobbi Rebell reports.
Forget prix fix bundling- let's go a la carte! That's Time Warner's latest proposed resolution to its blackout of top rated network CBS over the fees it pays to carry it. Will CBS bite? No, says James Dix of Wedbush Securities: SOUNDBITE: JAMES DIX, SENIOR ANALYST, WEDBUSH SECURITIES (ENGLISH) SAYING: "I don't think they are contemplating selling themselves on an a la cart basis and being sold in a different way than all the other networks in the overall package." The reason? for content providers like CBS- that would make it much more difficult to raise prices every year- a reality that gives cable operators like Time Warner a lot of leverage explains Craig Moffett of Moffett Research: SOUNDBITE: CRAIG MOFFETT, FOUNDER AND SENIOR RESEARCH ANALYST, MOFFETT RESEARCH (ENGLISH) SAYING: "People used to say, wow, the programmers will eventually go direct to the consumer. It would be the worst thing that would ever happen to them because suddenly they would have to convince consumers that it was the right time to take a price increase and their lives would get a lot harder. The cable operators by contrast would love to see that happen." For now- channels are bundled- so the consumer doesn't see the numbers of who gets paid what- and CBS says the math isn't adding up. As the top broadcast network- they bring in a lot more viewers than basic cable companies- but get paid a lot less per subscriber. For example TNT and USA network both have much lower ratings- and yet both get more- and in TNT's case significantly more- money from the cable companies. And CBS also holds a monopoly on events like NFL football games- which come fall -will give them the upper hand. But while it may seem reasonable that CBS and other broadcast networks demand more cash- these kind of disputes have consumers cutting the cord- and signing up for options like Netflix and Hulu. And the higher prices that result from paying programmers more to settle these disputes- often backfire as well- when consumers can't or won't pay up: SOUNDBITE: CRAIG MOFFETT, FOUNDER AND SENIOR RESEARCH ANALYST, MOFFETT RESEARCH (ENGLISH) SAYING: "The data says most people who are cutting the cord are not cutting the cord in favor or Netflix and Hulu and all the cool stuff that is on the internet. They are cutting the cord in favor of good old fashioned over the air TV antennas because they just can't afford the price of the package anymore." CBS has called the proposal "a sham" and a "public relations vehicle designed to distract from the fact that Time Warner Cable is not negotiating in good faith."