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Time Warner Cable Threatens to Drop CBS's Coveted Channel Placement

NEW YORK (TheStreet) -- CBS (CBS) was falling after Time Warner Cable (TWC) warned that the network could forfeit its coveted Channel 2 placement on the pay-TV provider's dial if the two companies cannot agree on a new carriage contract by tomorrow at 9am EDT.

In response, CBS, in a statement, said the network wouldn't agree to a re-transmission deal involving CBS-owned local television stations in New York, Los Angeles and Dallas if the network loses its spot on the dial.

"CBS obviously won't be making any deals where we are required to change our channel position," the company's statement said.

CBS was falling in mid-afternoon trading, dropping 0.3% to $52.33 while Time Warner Cable was slipping 0.2% to $117.10.

The two media companies, each with market capitalizations around $33 billion, are locked in negotiations over fees that Time Warner Cable pays CBS to carry its programming on local TV stations in those three cities in addition to smaller areas in other cities where the cable-TV company has operations. A failure to come to an agreement could result in a blackout of CBS channels for Time Warner Cable subscribers.

The companies' five-year re-transmission agreement expired on June 30, and was extended to July 25 at 9 a.m. EDT.

If CBS were to lose its Channel 2 position on the Time Warner Cable dial, BTIG media analyst Richard Greenfield said in a blog post that there would be more than a few networks eager to fill the spot.

"While every channel should want to be in the 2 slot in the two biggest cities, we suspect channels that skew older (for whom legacy channel position probably matters more) are more likely to place greater value on the channel 2 position," Greenfield wrote.

A&E, AMC Networks' (AMCX) flagship station, and Tribune's (TRBAA) WGN would be among the most likely bidders, he said.

As for a winner in the CBS/Time Warner Cable spat, Greenfield says that the content provider rather than the owner of the pipes historically has the upper hand given the alternative ways viewers can access their favorite shows.

Written by Leon Lazaroff in New York

>To contact the writer of this article, click here: LeonLazaroff.>.

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