“We are better off with CBS than we would have been if we had not had this fight,” Time Warner Cable CEO Glenn Britt told analysts this morning about the contract dispute that resulted in a 32-day blackout of CBS stations and channels this summer. If that’s true, then CBS must have started off bargaining for a horrific deal because the final results were terrible for Time Warner Cable. COO Rob Marcus, who’ll succeed Britt at year end, said that subscription losses — some disclosed in this morning’s Q3 earnings report — “were much worse than we planned.” They included “elevated customer disconnects” and a 10% increase in the number of people dropping video from their double or triple play packages. The sub losses “bled over into [broadband] and voice.” And the showdown contributed to a spike in calls to TWC’s service centers. The fracas ended up slashing revenues by $15M and cash flow by $5M in Q3 — and will have a spillover effect on Q4. The damage was “much greater than expected,” says Credit Suisse’s Michael Senno.  MoffettNathanson Research’s Craig Moffett was more blunt: “Every cable operator now goes to the table knowing that CBS not only won the war, but left TWC badly damaged even for having fought the fight.  If you thought the scales were tipped in programmers’ favor before, now you know that it is worse than you imagined.”

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Did TWC dig in its heels to prompt federal officials to reform the rules governing retransmission consent, most of which were set in 1992? Not according to Britt. That issue isn’t “on the top of anybody’s agenda in Washington” although the feds are “way overdue” to review the terms of engagement and “at some point they will.” Until then, “unfortunately I think these fights are going to continue.” If the rules changed, Britt doesn’t think that CBS and other broadcasters would try to escape government oversight by leaving the airwaves to become pay TV-only services. Based on the programming rights they buy, and other complicated contractual arrangements, “that is all easier said than done and it is not going to happen so fast.”