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Earning revenue from pay TV subscribers is crucial to CBS's growth prospects, analysts say. Even though CBS sends its signal out over the airwaves for free to anyone with an antenna, about 85 percent of its viewers watch TV through a pay TV provider. Such fees ensure the company is not so reliant on advertising dollars, which rise and fall with the economy. Meanwhile, Time Warner Cable is fighting to hold the line on costs as it struggles to keep subscribers. It lost 191,000 cable TV subscribers in the most recent quarter, ending with 11.7 million at the end of June. Even as the dispute lingered on, both companies posted healthy quarterly earnings this week. Time Warner Cable grew its net income 6 percent to $481 million, or $1.64 per share, as revenue rose 3 percent to $5.6 billion. CBS grew net income 11 percent to $472 million, or 76 cents per share. CBS's revenue also grew 11 percent to $3.7 billion thanks in large part to the fees that are in dispute with Time Warner Cable. Jonathan Atkin, an analyst with RBC Capital Markets, said TV distributors are taking a stand because programming costs are going up about 10 percent this year, an increase that's too high to pass onto customers. "They feel pressure when some of these cost drivers are going up the way they are," Atkin said. "They do need to show some teeth and try to negotiate something better." He said the dispute would probably end quickly to avoid depriving customers of key sporting events, like the PGA Championship starting on Thursday. CBS also airs its first preseason NFL game Aug. 23.
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