A moment of truth for pay-TV providers

Time Warner Cable clearly picked the wrong fight when it decided to resist CBS’s demands for higher retransmission fees and a narrower bundle of rights. By the time the stare-down ended on Sept. 2, 2013, and the 32-day blackout of CBS stations on TWC systems in New York, Los Angeles and Dallas was lifted, the broadcaster got nearly all of what it wanted and the cable operator had suffered severe financial and strategic damage. Just how severe became clear, with the release of TWC’s third-quarter results, which covered the blackout period.

The multiple service operator lost 306,000 video subscribers in the period covering July 1-Sept. 30 — the largest quarterly loss in the company’s history and nearly double Wall Street’s consensus estimate. Subscriber revenue fell by 5 percent in the quarter, or $122 million. While it’s not possible to attribute all of those subscriber losses to the blackout — Comcast wasn’t affected by the blackout and also lost subscribers in the quarter — the magnitude of the hit TWC took was out of proportion to the rest of the industry, suggesting the CBS dispute had significant impact.