(Updates from 1:48 p.m. ET with closing information.)
On Monday, CEO Glenn Britt wrote a letter to his CBS counterpart, Les Moonves, offering a controversial compromise: the cable giant would sell CBS to customers on an "a la carte" basis. This practice would enable subscribers to cherry pick which CBS channels they wanted; normally, media companies such as CBS sell a bundle of channels to cable providers. Britt wrote, "Rather than our debating the point, we would allow customers to decide for themselves how much value they ascribe to CBS programming."
Time Warner pulled CBS and its other channels such as Showtime on Friday in New York, Los Angeles, Dallas, and other markets. The blackout has affected an estimated 3.5 million customers.Moonves shot back with his own letter on Tuesday, calling the proposal "specious," insincere, and "an empty gesture." He added, "Anyone familiar with the entertainment business knows that this is an empty gesture. The economics and structure of the cable industry have created a certain way that content is distributed and compensated." Time Warner Cable responded in a statement that they were "disappointed" in CBS's "lack of responsiveness."
IBM (IBM) shares fell 2.10% to $191.40 after a downgrade by Credit Suisse. Credit Suisse analyst Kulbinder Garcha cut his rating on the venerable technology company's stock to "underperform" from "neutral," with a price target of $175. Garcha cited a number of concerns, including IBM's market share, cash flow, and future organic growth. Garcha also noted that "the shift to cloud...continues to present risks given IBM's technology positioning." Reports came earlier this week IBM would furlough the majority of its US employees in the hardware unit. Those employees will be required to take a week off at one-third pay beginning either August 24 or August 31.
Sprint (S) shares rose 1.31% to $6.97 following the end of an SEC probe. The company said Monday the SEC had closed its investigation into the company's collection of local and state taxes and did not intend to recommend any enforcement action. The SEC issued a subpoena in July 2012 due to a lawsuit filed by New York Attorney General Eric T. Schneiderman seeking $100 million in unpaid taxes and triple damages. Last month, the New York State Supreme Court declined to dismiss the case; Sprint plans to appeal that decision. In addition, Japan's SoftBank Co. said Tuesday that it had increased its stake in Sprint by 0.73% to 79.07%. The share purchases, made through subsidiary Galaxy Investment Holdings, were intended to increase the company's ownership to 80%.
Closing prices: TWC closed down 1.9% to $114.26, IBM fell 2.3% to $190.99 but S closed up 1.3% to $6.97. --Written by Laura Berman in New York
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