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About a month ago, Time Warner Cable blacked out CBS in several major markets including Los Angeles, New York and Dallas, because of a dispute with CBS over pricing for retransmission fees. Both sides, of course, point fingers at the other with CBS saying that Time Warner Cable is not willing to pay fair value for their content. While Time Warner Cable is screaming that they’re overcharging. Similar to a parental dispute, caught in this mix are the children; Time Warner Cable & CBS customers. Customers have actually sued Time Warner Cable stating that Time Warner is depriving them of content they want, while still charging them full subscription rates. As Time Warner scrambles to appease its customers through replacement programming and… wait for it… free antennas, CBS is sitting back watching the millions of people being deprived of their content.
You know you’re in a bad spot when you’re a cable provider charging a premium to deliver content to people and have to offer them antennas to watch the content. Antennas which they could have used to get the content for free to begin with… on their own… without you. That would be like a bottled water company telling you to drink from the kitchen sink.
Regardless of the outcome, there are some lessons to be learned from both of them.
Content is king. Bottom line. CBS has the product that Time Warner’s customers are paying them to deliver. They’re the newspaper not giving the news out to the paperboy. Customers aren’t blaming CBS for the lack of content. They’re blaming Time Warner. The fact is that great content has tons of benefits for a business. Content… no… GOOD content provides everything from SEO value, social media and exposure, to blog traffic and press attention. In this case, Time Warner may have started with the upper hand since many shows are off for the season. So, the content that consumers were missing wasn’t as valued. That’s slowly changing as popular TV show season premieres and the NFL football season gets closer to beginning. I expect Time Warner customers will get more irate and vocal when they’re not able to watch their Dallas Cowboys or New York Giants playing football or get their weekly Homeland fix on Showtime. Even Wall Street is betting on CBS as “CBS shareholders have become richer while TWC shareholders have become poorer”, according to a Forbes article.
Our economy is based on supply and demand. In this case, CBS has the supply and it’s in demand. We can all safely predict that the reinstatement of CBS content on Time Warner cable is all but guaranteed. CBS will have more incentive to compromise as the loss of substantial advertising revenue from football and primetime broadcast shows increase. Time Warner will be increasingly under the gun to provide that programming to its customers.
In the end, I believe Time Warner will ultimately bear the brunt of the consumer back lash since they are not delivering the promised content. CBS just needs to sit back and listen to the applause once their content is restored.