No Garden Party For Time Warner Cable As MSG Shoots For Fatter Fees
MSG Networks is demanding a price hike of 53%, which is much larger than what Time Warner Cable is willing to pay. As this impacts about 2.8 million subscribers, Time Warner Cable will face increased costs of about $80 million a year. If the company chooses to absorb these costs, we estimate that there could be about 10% downside to our current $65.67 price estimate. Time Warner Cable has high leverage and any increase in costs affect its value significantly. However, this might still be a better bet compared to losing subscribers and facing brand damage if the stand-off between the company and MSG Networks continues too long.
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