Is The Pay-TV Industry Divided Over Ad Skipping?

by Trefis Team
Time Warner Cable
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While Dish Network (NASDAQ:DISH) has been under the heat from media companies over its Hopper DVR that allows automatic ad skipping, Time Warner Cable (NYSE:TWC) seems to be adopting an opposite approach. The company recently filed a patent for a technology that will disable fast-forwarding and other similar functions on DVRs. [1] Pay-TV companies are sandwiched between customers and media giants and pleasing one may lead to agitating the other.

While Time Warner Cable’s approach may be welcomed by media companies, Dish’s stance is more favorable for end-customers. Who is going to win this battle?

Over time the industry will need to change according to consumer demands but it may be possible that in short-term media companies will have their way. It appears that Time Warner Cable may be doing this to place itself in a more favorable position when it comes to the negotiation of carriage fees with content owners.

Advertisements are still a big supporting pillar when it comes to monetizing TV content and any threat to this stream will be strongly opposed by media companies. They may even resort to much higher carriage fee if advertisements are disturbed by DVR advancements. It is well known that carriage fee increases have led to several disputes between pay-TV companies and media giants. See our complete analysis for Time Warner Cable

A difference in stance among pay-TV providers is likely to benefit media companies who could take advantage of such a situation. There is also a chance that Time Warner Cable’s pay-TV subscribers may get agitated with such implementation. It is not going to be a good thing for the company given that it is still struggling with substantial subscriber losses. However Time Warner Cable seems to think that it is the media companies that have the real power and not the customers.

Our price estimate for Time Warner Cable stands at about $76, implying a discount of about 5% to the market price.

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  1. Time Warner Cable patents method for disabling fast-forward function on DVRs, FierceCable, June 19 2012 []
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  • commented 6 years ago
  • Why don't CBS, FOX, and NBC execs want consumers to enjoy commercial-free TV? It's what we want! I'm a customer and employee of Dish, and I think AutoHop is great because you can easily watch commercial-free TV. A well known consumer advocacy group, Public Knowledge, agrees that people should have the right to control how they watch TV. They're taking a stand for consumers by creating a petition that tells CBS, FOX, and NBC media to keep their hands out of your living room and DVR. Sign their petition to keep control of how you watch TV