Analysis: Cable consumers face more blackouts, higher prices

Tue Sep 3, 2013 8:14pm EDT
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By Liana B. Baker

(Reuters) - Cable and satellite customers beware. Prepare for more blackouts of major stations and keep a close eye on that cable bill.

The cost of a deal announced Monday between Time Warner Cable and CBS, that ended a month-long blackout of the main CBS channel and its Showtime cable offering in New York and Los Angeles, is likely to be passed onto the consumer.

And as video programming costs climb across the board, there are likely to be many similar disputes leading to a disruption of service in various parts of the country.

This year so far, there have already been blackouts in 80 markets, putting cable and satellite companies on a path to beat last year's count of blackouts in 91 markets, according to the American Television Alliance, which tracks such disputes.

The broadcaster usually wins. Time Warner Cable's fees for CBS channels and programming will likely triple over the next few years, media analysts said. Time Warner Cable's blacking out of CBS channels slowed but didn't significantly curb the retransmission fees that CBS was seeking, they said.

The two sides came to an agreement only four days before the start of the highly popular National Football League's regular season. CBS has rights to broadcast top games on Sunday afternoons.

Time Warner Cable's hard line could embolden other players to be just as aggressive at dropping popular channels, said Barry Parr, an analyst at research firm Outsell who follows the television industry.

They may have little choice. Video margins for cable companies have been shrinking. Barclays' analyst Kannan Venkateshwar estimates video programming costs grew to 44 percent of operators' video revenue in 2012 from 35 percent in 2005.   Continued...

Combination photo shows the CBS logo on stage during CBS portion the 2013 Winter Television Critics Association Press Tour in Pasadena and the Time Warner Cable logo in Carlsbad, California on January 12, 2013 and November 5, 2012 respectively. REUTERS/Bret Hartman/Files (CBS) and REUTERS/Mike Blake/Files (Time Warner)