UPDATE 2-Time Warner Cable says it lost customers from blackout

Wed Sep 11, 2013 8:21pm EDT

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Sept 11 (Reuters) - A Time Warner Cable Inc executive said the pay TV operator lost subscribers during a month-long blackout of CBS Corp in three major markets, while the broadcast network's CEO said it suffered no financial harm from rate dispute.

The absence of CBS and the company's Showtime cable channel "definitely had a subscriber impact," Rob Marcus, Time Warner Cable's president and chief operating officer, said on Wednesday at a Bank of America Merrill Lynch conference.

"It suppressed connects on the front end, and it increased disconnects of existing customers," Marcus said.

On Aug. 2, CBS went dark on Time Warner Cable systems in New York, Los Angeles, Dallas and other cities. The network returned when the two sides settled their differences on Sept. 2.

Speaking at the same conference, CBS Chief Executive Leslie Moonves said the network did not take a financial hit during the blackout. The top-rated broadcast network was not forced to give advertisers "make goods," or compensation when a network misses its promised ratings, he said.

"You will see at our third-quarter earnings there was no harm done financially to CBS Corp from this," Moonves said.

Analysts had speculated that the blackout would have impacted advertising revenues for the network.

Marcus, who is scheduled to become Time Warner Cable's CEO on January 1, did not say how many customers the operator lost during the dispute.

Macquarie Capital analyst Amy Yong, in a Sept. 2 research note, estimated about 70,000 of the cable operator's 14.6 million subscribers were at risk of cancelling their service, which she called "a relatively insignificant number."

Marcus said Time Warner Cable felt it had to fight CBS' demands on the terms to carry the network because the issues at stake "had such significant implications."

"While there was a fair amount of pain that we needed to endure, at the end of the day, we felt like in order to achieve our longer-term business objectives, that was the only path," he said.

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