ANCHOR ENGLISH SAYING

Alright things are heating up between Time Warner and CBS and their battle over fees Time Warner is proposing that they resume carrying the top network but did they make it available on an a la carte basis lets get more from Wedbush Securities James Dix so what does this mean? What would it mean to go a la carte?

JAMES DIX ANALYST OF WEDBUSH SECURITIES ENGLISH SAYING

Well I guess you'd have a separate bill for one network and then you'd have maybe another bill for everything else it would be unconventional to say the least.

ANCHOR ENGLISH SAYING

Why is it so controversial? And why is Time Warner purposing this? There must be some angle here.

JAMES DIX ANALYST OF WEDBUSH SECURITIES ENGLISH SAYING

Well its interesting that this is I guess one of the first public offers that we've seen as opposed to all the private negotiations which have taken place up to this point so I guess I leave it to you to interpret that but I guess the bundle has been the way the business has developed over years, one bill and you pick your tearing of overall packages that you want and that's what you get and overtime the cable companies will pay TV operators to bundled in additional services beyond video such as phone and internet and that's basically the way terms of trade work in TV business today

ANCHOR ENGLISH SAYING

Now CBS might make the argument that they as the top rated broadcast network are bringing in a lot of eye balls and they are not being paid the same kind of re-transmission fees or affiliate fees IS what they are called with the cable networks as some of the cable networks that maybe don't bring in as many eye balls.

JAMES DIX ANALYST OF WEDBUSH SECURITIES ENGLISH SAYING

They are certainly making that argument and there is certainly some merit to it I mean if you just look at the network rating that's they have and you compare them to the ratings that the cable networks have CBS is probably getting a fraction of that affiliate fees of some of the larger general entertainment cable networks where as bring a much larger audience overall and they are arguing that has to change.

ANCHOR ENGLISH SAYING

And why is it? How is the system set up that way? It jus doesn't sound like it makes a lot of sense.

JAMES DIX ANALYST OF WEDBUSH SECURITIES ENGLISH SAYING

Yeah, to some extent it's the fact that the broadcast networks started out they were the legacy networks and their revenue stream came primarily from advertising so originally that's how they funded their programing they had large audiences much larger than anyone else the audiences advertisers wanted and that was a sufficient way for them to have a single revenue stream competitive source of revenue to fund all their programming including the high priced programming which they have to basically get from other players like the NFL, overtime as cable networks got more audiences and they built up their affiliate fee base you started to have a necessity for broadcast networks to have a second revenue stream this re-transmission revenue stream and basically were in the process of switching over to more of that type of system were the broadcast networks are funded through a more balanced dual revenue stream but were not there yet.