Time Warner Cable Lost Subscribers During CBS Blackout

COO Rob Marcus said cable operator had 'no choice' but to fight CBS on retrans fees

Time Warner Cable Blackout

Time Warner Cable dropped an unspecified number of customers as a direct result of the 32-day blackout of CBS stations in major markets and the loss of Showtime nationwide, but chief operating officer Rob Marcus said the MSO had no choice in the situation as it tried to get a better deal from the Eye.

The blackout “definitely had a subscriber impact,” Marcus said, speaking at the Bank of America Merrill Lynch Media, Communications and Entertainment conference Wednesday in Beverly Hills. “It suppressed connects on the front end and increased disconnects of existing customers.”

But given long-term implications of rising retransmission-consent fees, TW Cable had “no choice” but to hold the line in the CBS fight, Marcus sad. More than 3 million cable customers lost access to CBS-owned stations in New York, L.A., Dallas and other markets, and TW Cable dropped Showtime and three other cable nets across the U.S.

SEE ALSO: CBS, Time Warner Cable Reach Deal to End Blackout

“While there was a fair amount of pain that we needed to endure, at the end of the day we felt like in order to achieve our long-term objectives, that was the only path,” he said.

CBS CEO Leslie Moonves, also speaking at the conference Wednesday, said the TW Cable blackout did not inflict any financial damage on the Eye. “(T)here was no harm done financially to the CBS Corporation” from the standoff, he said.

TW Cable incurred marketing expenses, costs for distributing free antennas and costs for offering replacement programming during the CBS blackout, Marcus said. But, he added, “at the end of the day, I think it’s fair to say we ended up in a much better place than we started.”

As of June 30, Time Warner Cable had 11.72 million video subscribers, losing a net 191,000 in the second quarter.

Marcus is set to become CEO of Time Warner Cable in January 2014, following the retirement of chairman and CEO Glenn Britt. At the conference Wednesday, he said the retransmission-consent dispute with CBS showed the need for a “rewrite” of the 1992 Cable Act.

SEE ALSO: Time Warner Cable Subscribers Sue Over CBS, Showtime Blackout

This week, spurred by the CBS-TW Cable blackout, U.S. Rep. Anna Eshoo (D-Calif.) introduced a bill aimed at eliminating such outages. The Video CHOICE (Consumers Have Options in Choosing Entertainment) Act would grant the FCC explicit authority to grant interim carriage of a broadcast station during a retrans standoff; allow customers to choose to not subscribe to broadcast TV; prohibit bundling of cable programming in retrans negotiations; and call on the FCC to look at whether blocking online video during a dispute constitutes failure to negotiate in “good faith.”