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Time Warner Cable faces tough defense for Lakers channels

October 25, 2012|By Joe Flint
  • The Lakers' Kobe Bryant
The Lakers' Kobe Bryant (Luis Sinco / Los Angeles…)

Time Warner Cable's new Lakers channels are having trouble taking it to the hoop.

On Wednesday, Cox Cable and satellite broadcaster DirecTV went public with complaints about Time Warner Cable's lack of flexibility in negotiating deals for SportsNet and the Spanish-language Deportes, the new television outlets for the Lakers.

Launched Oct. 1, Time Warner Cable has yet to strike deals with any other distributors for the channels, which will carry the majority of Lakers games starting October 31.

That means millions of Lakers fans could miss lots of games if contracts are not signed soon. Though Time Warner Cable has over 2 million subscribers in Southern California, many people in the region have other pay-TV providers. DirecTV has 1.7 million subscribers and Cox has about 1.2 million. Dish Network has about 900,000 subscribers and Charter has over 350,000 customers.

At issue is the price Time Warner Cable wants for the two channels. Although the cable company has never publicly disclosed what it is seeking, people close to the situation said it is looking for as much as $3.95 per subscriber, per month for SportsNet. That makes the regional sports channels two of the more expensive offerings in the marketplace.

Cox and DirecTV said they had offered to carry SportsNet and Deportes on a specialty tier of sports channels that subscribers would have to order separately to receive.

"We understand that sports programming is very popular, but that programming comes at an extremely high price," Cox said in a statement. DirecTV said it and Time Warner Cable "share a responsibility to ensure that both fans and non-fans alike avoid any extraordinary increases to their families' monthly bills."

Time Warner Cable is not interested in offering SportsNet and Deportes in a specialty tier.

"Cox and DirecTV know that there is no regional sports network anywhere in the country that is offered on an optional tier -- that would be unprecedented," Time Warner Cable said in a statement. The company added that it pays more to carry Root Sports, a channel owned by DirecTV, than what it is asking for SportsNet and Deportes.

Time Warner Cable wants the largest distribution possible because the more homes the channels are in, the more it can potentially make in advertising. Also, at $3 billion for 20 years, Time Warner Cable's agreement with the Lakers is too expensive for the cable operator to settle for being on a tier with limited distribution.

One of Cox's gripes is that the price is too high for a channel that essentially only has one major sports franchise. SportsNet and Deportes also have the Galaxy soccer team, but the Lakers are the big draw.

"The price for the Lakers is one of the highest wholesale prices that we have seen, especially when you consider it on a 'per game' basis: only 53 of the Lakers' 82 regular season games will be exclusively available on Time Warner Cable," Cox said in a statement, adding that the other Lakers games are available on ESPN, TNT and ABC.

Time Warner Cable's top priority is getting a deal done with either DirecTV or Dish. Both satellite services compete head-to-head with Cox and Charter. If DirecTV and/or Dish have SportsNet and Deportes, they can try to steal customers away from Cox and Charter. Time Warner Cable does not compete directly with Cox or Charter. 

Time Warner Cable decided to launch its channels in part to combat having to pay excessive fees to carry sports programming. The Lakers previously were on News Corp.'s Los Angeles regional sports network, Fox Sports West.

"We prefer not to be in this business, and if we had been charged more reasonable rates, we probably wouldn't be in this position," Time Warner Cable Chief Financial Officer Irene Esteves told Wall Street analysts recently.

The Los Angeles market already has a large number of sports channels. Besides SportsNet and Deportes, there are Fox's Fox Sports West and Prime Ticket. There is also the just-launched Pac-12 Network, which carries some USC and UCLA football.

Time Warner Cable is not expected to rest with just the Lakers. The Dodgers' TV deal with Prime Ticket is ending soon, and if given the opportunity, Time Warner Cable has said it will pursue the TV rights for the team. Prime Ticket currently has an exclusive window with the Dodgers to renew the deal.

ALSO:

Time Warner Cable warily enters sports programming game

Limited reach of Lakers channel may leave bar owners thirsty

Cox Cable and Time Warner Cable at odds over Laker channels

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