Content is still king. Period. With all the digital content options and the proliferation of cable alternatives, one thing is still clear: There is no substitute for CBS' top-rated shows or Sunday Night Football. There are a lot of substitutes for that $100-plus cable TV bundle.
CBS and Time Warner Cable didn't reveal the terms of the deal that resolved the monthlong blackout of CBS and Showtime to 3 million-plus subscribers in the key markets of New York, Los Angeles, and Dallas. But the comments from both companies speak to a clear CBS victory. Not only did the company win a price hike but it did not have to hand over to Time Warner Cable all the access it wanted to the online content CBS sells to digital distributors.
CBS CEO Les Moonves described this digital rights victory as "the ability to monetize our content going forward on all the new, developing platforms that are right now transforming the way people watch television."
Why did CBS win? It all comes back to that leverage of original content.
"It doesn't take much to push a consumer to say, 'I don't want to miss the football season, and I'd be just as happy or happier if I had Verizon FiOs anyway.' That put Time Warner Cable in a very vulnerable position as you head into the first week of the NFL season."
(Read more: CBS win squeezes TWC's margins)
The proliferation of content distribution alternatives is massive: There are the satellite TV giants like DirecTV; the telecom players such as Verizon FiOS, which just a week and a half ago renewed its deal with CBS; and soon tech giants will be offering alternatives—Intel is working on a pay-TV package that it will stream to subscribers. And for those looking to cut the cord to a hefty monthly bill, companies such as Aereo stream limited live-TV channels to mobile devices for less than $10 a month.
The paradox: It's unusual for increased competition to drive prices up instead of down.
"The reason is, any programmer can now play one distributor off the other, and the net result is that the content costs get passed on to the consumer," said Moffett Bernstein analyst Craig Moffett.
What does this mean for the cable giants?
They'll keep shifting their focus away from their shrinking pay-TV subscriber base and toward fast-growing broadband, which yields higher margins. They'll figure out ways to make more money from providing that broadband pipe, which allows consumers to stream so much content. They'll consider options such as tiered pricing.
(Related video: Details of CBS-TWC deal)
And, like TWC CEO Glenn Britt did in the wake of this deal, they'll advocate for legislative reform of retransmission rules from Congress and the Federal Communications Commission.
BTIG analyst Rich Greenfield is optimistic about a shift in the balance of power to give the giants more leverage, saying that "the disequilibrium that currently exists is not sustainable."
—By CNBC's Julia Boorstin. Follow her on Twitter: