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3 Lessons from the Time Warner Cable/CBS Feud

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This Halloween, it seems, was a particularly frightening one for the execs at Time Warner Cable. Information released by the company on Thursday shows that during its third quarter, the cable provider lost more than 300,000 video subscribers for a loss of about $122 million.

The loss is the result of a public feud with CBS, during which Time Warner blacked out the network from its lineup—a power play that ultimately damaged its own reputation much more than CBS’s.

Time Warner’s losses in this standoff were clearly many, and they can teach every business a few valuable lessons about maintaining the right public image.

1. Pick Your Battles

Time Warner pulled the plug on CBS because it thought that the network’s asking price was too high. Instead of meeting CBS’s price—which they eventually did anyway—they threw down the gauntlet. And despite Time Warner’s size and resources, CBS is a powerhouse they never should have taken on.

As the most-watched network on television—and by a considerable margin—CBS is a ratings juggernaut year after year. Time Warner took a big risk axing the most popular station on its lineup, and it didn’t pay off.

When you’re embroiled in a public negotiation, remember that saving face is just as important as taking a moral stand. Admirable as it is that Time Warner stood so firmly on its principles, it came off here as petulant and unwilling to negotiate—the equivalent of quitting a game because you don’t like the rules.

2. Put the Consumer First

By blacking out CBS, Time Warner thought it was sending a clear message: “CBS has unfair demands.” To consumers, though, the cable provider actually sent a much different message: “We care more about our money than your happiness.”

Again, CBS is the highest-rated network on television. When Time Warner cut it, they alienated that station’s unparalleled audience. The people who wanted to tune in to CBS pay their cable bills, so why shouldn’t Time Warner have to meet its own financial obligations? Time Warner’s gambit hurt viewers more than it hurt CBS, and in maintaining the feud, the cable provider showed its customers where its priorities were.

You may find yourself in a situation that you consider unfair. You may think that others are asking too much of you. But if the way you respond to these situations has a ripple effect that hurts your customers, don’t expect them to remain your customers very long.

3. Know When You’re Defeated

After a month of blacking out CBS, Time Warner did the smartest thing it had done throughout the entire feud: it gave up.

In the end, Time Warner decided to go ahead and just pay CBS the increased rate the network was asking for. With nothing gained and only further to slide, Time Warner cut its losses, gave in and set things right.

When you’re stuck in a standoff like this, you can either double down on your principles or suck it up and accept that you can’t win. By sticking to your guns until the bitter end, you can make your situation exponentially worse over time. It’s ok to lose a negotiation every now and then—and much better to lose a negotiation than to lose the respect and business of your customers.

 

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