CBS and Time Warner Cable Are Both Losers

There's finally a truce in the monthlong battle between CBS and Time Warner Cable

Time Warner Cable subscribers finally started receiving CBS, Showtime, and other CBS-owned cable channels last night. They were the real losers here, collateral damage in a battle between two fading media moguls that actually benefited from the outage. Time Warner Cable profited from not having to pay CBS. CBS gained ground by reinforcing how important its programming is to some cable customers.

The tables turned last night.

Sure, CBS and Time Warner are busy patting their own backs. They don't realize that cable customers just gained the upper hand. There's one more reason to cut the cord. There's one more reason to move to the piecemeal pricing that will treat subscribers with the respect that they deserve.

After all, did anyone really miss CBS' Smithsonian Channel? Even if the average Time Warner Cable customer is just paying pennies a month for the network, that's too much for the vast majority of homes that aren't watching. Sure, those that do watch would likely be willing to pay far more than the average that they are paying. Let them. It's inevitable.

Showtime is a popular premium movie channel that has been home to some of television's best shows. Homeland, Dexter, and now Ray Donovan are some of the most critically acclaimed shows on television. Unlike some of the other deals struck in last night's carriage deal, subscribers already have a choice as to whether they want to pay for Showtime or not. Well, is Showtime really worth twice as much as a Netflix subscription? 

Some will argue that Showtime is worth that much, but there's a reason why the stunt that played out in August between CBS and Time Warner Cable will be ultimately beneficial to Netflix. Customers can't catch Showtime unless they're already paying for overpriced cable and satellite television plans, making Showtime far more expensive than the $7.99 a month that Netflix is commanding.

Netflix will naturally win as the quiet cord-cutting revolution picks up steam.

Analysts at UBS estimate that this country's pay-TV market declined by 208,000 households through the first half of the year. By targeting 250,000 net defections for all of 2013, this will be the first year that the industry suffers a step back. 

Hollywood had better get used to it. The spat between Time Warner Cable and CBS this summer was ugly, but it ultimately reminds us that we can spend a month without watching some of the industry's most prolific channels. We may not exactly be ready for Netflix's "rerun TV" platform of earlier seasons as our lone consumption vehicle, but the world didn't end just because Time Warner Cable customers missed out on a few episodes of Ray Donovan. Right?

Subscribers may not realize this, but they won this fight. If Time Warner Cable takes a subscriber hit by TV buffs feeling that they were wronged, it loses. If they stay put, Time Warner Cable and CBS lose because it proves that customers don't care. Apathy, in time, can be just as deadly as subscribers cutting the cord this summer. 

You can't cheat cable subscribers and get away with it.

Netflix to the rescue
Americans reportedly spend nearly 34 hours a week watching television! With television viewing taking up almost as much time as the average work week, the potential for profits in the space is enormous. The Motley Fool's top experts have created a new free report titled "Will Netflix Own the Future of Television?" The report not only outlines where the future of television is heading, but offers top ideas for how to profit. To get your free report, just click here!

The article CBS and Time Warner Cable Are Both Losers originally appeared on

Longtime Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story