I have a short essay on the online edition of The New Yorker today about the current CBS-Time Warner Cable smackdown. If you don't live in New York City, maybe you haven't heard: Last Friday, Time Warner Cable—the second largest cable provider in the US, with 12 million customers—summarily dropped CBS and all the other channels CBS owns in a dispute over retransmission fees. These are the fees that cable and satellite providers pay to carry television networks. They've become an increasingly important source of revenue for broadcast and cable networks alike—and an increasingly burdensome expense for companies like Time Warner Cable that have to pay them. Hence the dispute: CBS wants more for the privilege of carrying its channels than Time Warner Cable is willing to pay. Last Friday, Time Warner Cable went nuclear. CBS responded in kind, blocking access to its shows online for Time Warner Cable broadband subscribers. This kind of thing has happened before, of course, but today, with cable subscriptions declining for the first time ever, it's starting to look like Mutual Assured Destruction.
To deal with this situation, I have a modest proposal: Why stop at CBS? Why shouldn't Time Warner Cable drop every network, focus on its high-speed Internet offerings, and get out of pay TV altogether? This is not going to happen any time soon, of course—TV contributes nearly half the company's revenue, and too many of its customers would howl. But don't think the cable chieftains haven't thought of it. On the same day Time Warner Cable dropped CBS, James Dolan, CEO of Cablevision—the much smaller cable provider based on Long Island—told The Wall Street Journal that "there could come a day" when his company gets out of television and makes broadband its main business. He also noted that his kids prefer to watch TV over the Internet, through Netflix.
There's a good reason cable providers should rethink TV: They really, really suck at providing it. For years, marketing experts have been telling them they need to build their brands by offering more and more services. The problem is, they can't manage the services they've got, and they probably never will. Take my Time Warner Cable remote, for instance. As I said at the top of the New Yorker post,
For television viewers in New York and other cities, Time Warner Cable’s decision, last Friday, to drop CBS and subsidiary networks like Showtime in an acrimonious financial dispute meant not knowing what would be next for “Dexter” and “Ray Donovan.” It meant that for me, too—but it also meant not having to stand in front of the DVR, holding down the channel-change button until it reached 222. That’s what I’ve had to do ever since my remote stopped working a few weeks ago. I could try calling Time Warner Cable’s help line, but years of frustration have diminished my appetite for largely fruitless phone exchanges with cable personnel. This tells you a lot about what’s wrong with cable.
For more, please visit The New Yorker's Elements blog.