CBS Blackout Could Be Costing It $400,000 per Day: Analysts

CBS

CBS may be losing about $400,000 daily because of the blackout in major Time Warner Cable markets, now entering its fourth day — although the total financial blow to the Eye from the spat likely will be minimal, according to Wall Street firm UBS.

The estimate includes lost retrans revenue and a loss of advertising dollars at both the network and CBS local stations, according to UBS. Every two weeks of being dark on TW Cable equals a loss of 1 cent per share, the firm calculated.

SEE ALSO: CBS Stations, Showtime Go Dark for Time Warner Cable Customers

On Friday at 5 p.m. Eastern, Time Warner Cable pulled CBS signals for approximately 3 million subscribers, primarily in New York, L.A. and Dallas. The operator also dropped Showtime and three other CBS-owned cablers, while the Eye retaliated by blocking Time Warner Cable broadband subs from accessing full episodes online.

If history is a guide, the standoff should be resolved in less than two weeks, UBS said, although other observers have suggested CBS and Time Warner Cable may not come to terms until September.

“Our view continues to be that consumers have more loyalty to the content rather than the company which is responsible for distribution, and with contracts often running 5+ years, CBS can’t afford to take below-market value given the inability to renegotiate terms,” UBS analysts John Janedis, Jaime Morris and Michael Russo wrote in the Aug. 4 note.

CBS’s estimated daily loss of $400,000 is small coin in relation to the company’s total revenue: In the second quarter, the Eye reported $3.7 billion in revenue and net income of $472 million.

Meanwhile, Time Warner Cable also stands see financial losses mount the longer the feud continues, as disgruntled customers cancel. UBS did not have estimates on the effect of the blackout on the cable operator.

CBS said Sunday that the companies were not actively negotiating. The Eye said Time Warner Cable rejected an offer to extend their previous deal while talks continued, but the cable operator disputed that and claimed it offered CBS a one-year extension.

Prior broadcast and cable blackouts have had limited effect on stock prices, according to UBS. The firm cited Fox’s 15-day outage on Cablevision in 2010, a 28-day blackout of Fox cable channels on Dish Network in 2010, and Viacom’s nine-day blackout on DirecTV last summer as having had little impact on share prices.

Filed Under:

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 5

Leave a Reply

5 Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

  1. Shelly Sharp says:

    One thing I’ve realized is I don’t really care for any CBS shows. I thought I would miss Big Brother and a few others but am thankful to spend my hours doing something else. I’m no longer addicted and probably will delete CBS from my program guide if it comes back just to make sure I don’t get re-addicted.

  2. Shane Sawyer says:

    I’d rather pay CBS directly for their shows, than to pay a cable company that treats me like shit every time I have to call customer care, or one that outsources our American Jobs to India and the Philapines. That’s the biggest reason I left Comcast and switched to OTA and Roku (and pay $7.99 per month for Hulu plus). I can still watch my shows, I just have to wait a couple days now. And I can also watch them online via the broadcaster’s networks. CBS is correct, people care more about the content, than the company that provides it.

    • mike says:

      you do realize cbs is a free over the air channel. so instead of paying big companies to re-broadcast it too you, just buy a $40 HD attenna and watch it for free.

  3. deborah holt says:

    Gave it serious thought im not happy getting caught in the middle of a dispute

  4. lboogie81 says:

    Damn! I could use that money!

More Biz News from Variety

Loading