Earnings reports reveal an unexpected victor in corporate standoff
When CBS and Time Warner Cable played a daring game of chicken over the summer, another company earned business by waiting quietly at the side of the road.
In the dispute over fees, Time Warner Cable blacked out CBS in New York City, Los Angeles and Dallas for a month. And lots of fed-up customers gave up on Time Warner Cable, and jumped to DirecTV.
New third-quarter earnings reports for CBS and Time Warner Cable reveal that neither suffered much damage to their bottom lines. CBS met analysts’ earnings expectations, and TWC beat them, despite shedding hundreds of thousands of subscribers.
But satellite TV provider DirecTV gained nearly twice as many subscribers as analysts had predicted, even as TWC lost 306,000 viewers. DirecTV easily beat earnings expectations.
Another satellite company, Dish, will announce its numbers next week.
TWC chief operating officer Rob Marcus, who is preparing to take over as the company's CEO, said the standoff “clearly resulted in short-term pain for us.” But he said TWC had to stand its ground to keep fees down. The two sides were fighting over how much the cable company would pay the network to air its stations.
“In the end, the deals we reached were far better than where we started,” he said.
Moonves said he wished the “conflict could have been resolved “more quickly — and peaceably.” But he said CBS's “record-breaking third quarter results today speak for themselves.”
DirecTV chief financial officer Patrick T. Doyle said the company received “a modest benefit” from the Time Warner Cable-CBS dispute and another between Dish and Raycom. But that assessment itself may have been modest.
The largest U.S. satellite TV provider had 139,000 net additions, nearly double the 70,000 analysts had expected, according to research firm StreetAccount.
Satellite companies won't always win in fights over fees: DirecTV and Dish Networks also fight networks over fees. And when they do, many customers may opt to try their luck with cable.