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CBS, Time Warner Cable Squabble Rages as Investors Yawn

NEW YORK ( TheStreet) -- CBS (CBS - Get Report) and Time Warner Cable (TWC - Get Report) have entered Day 11 of their version of Mutual Assured Destruction, or more officially, a disagreement over retransmission rights that has resulted in a blackout of the network's programming for the cable-TV operator's customers in New York, Los Angeles and Dallas.

Ever since negotiations failed to produce an agreement, both sides have been touting their version of events while pointing to reports from consumer groups, industry associations and Wall Street analysts in hopes of asserting that the other guy is the one really screwing the consumer.

Investors, though, have taken the squabble in stride.

Since Aug. 2 at 5 p.m. when the two companies declared they were too far apart to avoid blackout, CBS has dropped 1.5%, paring its 2013 advance to an already formidable 41%. Time Warner Cable has slipped a somewhat larger 3%, trimming its gain this year to 17%.

To put that pullback into context, the S&P 500 has lost 1.3% over the past week as investors generally showed signs of pulling back from a market that hit its all-time record high on that same day, Aug. 2, and has jumped 18% this year, the best start to a year since 1997.

To recap: Time Warner Cable cut the plug on CBS programming in areas where the company's owns the network's local affiliate, arguing that CBS wanted to charge a 600% mark-up from their previous fee agreement. CBS called the 600% claim hogwash while asserting that their network is the most-watched on television and deserves to be paid top-dollar.

The only Time Warner Cable customers affected by the blackout are those that lie with the reach of CBS-owned local-television stations. Those areas happen to be among the largest metro regions in the country: New York, Los Angeles and Dallas, encompassing 3.2 million Time Warner Cable customers.

Time Warner Cable has standing agreements with the owners of CBS-affiliates elsewhere in the country, though the owners of those stations are surely watching these negotiations to get a sense of what CBS might demand from them in retransmission fees in the future.
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