Time Warner Cable vs CBS: The Effects on the TV Industry

Richard Greenfield, a media and technology analyst, was on CNBC friday morning to talk about the CBS/Time Warner Cable dispute, as the final dead line between the companies approcahes In the segments, there are a few interesting points that really stood out for me.

First, Greenfield points out that the broadcast networks war looking for a big payday from the cable providers, from retransmission fees.

"... each broadcast network, NBC, ABC, FOX, Univision, all as you get to 2020 want to be paid upwards of $2 per person or per household per month. that's a $12 billion annual free caused for over the air free broadcasting. "

At $2 per subscriber, each network would rake in $200 million each month. The $12 billion annually for each network is close to, is not more than, what they currently get from advertising.

Another great bit of information Greenfield asses along is that the cable companies have a lot higher margin profit from broadband internet services than the do from video services. If you are paying $65 to $80 just for cable, without premium channels, just the broadcast networks and ESPN are grabbing in excess of  20% to 25% of that payment. Then when you include all the other networks, at least 50% may be redirected to the networks.

With broadband, The $20 to $75 for providing the internet is not shared with ANY one else. The cable companies get to keep every bit of that bill. The cable companies would rather give up Cable TV and just sell everyone high level broadband internet.

The last point made is an internet company getting into THE NFL. The Sunday Ticket package is up after the 2014 season. Companies like a Google or Apple can easily afford the $1 billion+ per season rights fees it would take to acquire that NFL package. If either one of those two companies did this, you could/would see a swarm of households getting Apple TV or Google TV. And, in doing so, they may drop cable to pay for their new video service. And either way, Time Warner Cable, Cablevision, and COX cable will benefit.

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