Kobe Bryant and the Lakers are moving to Time Warner Cable (Los Angeles Times )
Time Warner Cable is a reluctant entrant to the sports programming game.
The cable giant is launching English- and Spanish-language sports channels in Los Angeles that will be home to the Lakers and Galaxy. Time Warner Cable is expected to also bid aggressively for the television rights to the Dodgers, whose deal with Fox's Prime Ticket expires after next season.
But for Time Warner Cable, its moves are defensive. Tired of being squeezed by sports cable channels for higher subscription fees, it figured if you can't beat them, join them.
"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," said Time Warner Cable Chief Financial Officer Irene Esteves at the Bank of America Merrill Lynch 2012 Media, Communications & Entertainment Conference in Beverly Hills on Wednesday.
Time Warner Cable is seeking $3.95 per subscriber, per month for its SportsNet and Deportes channels, which are scheduled to launch Oct. 1. While Time Warner Cable will obviously carry the service on its systems in the region, it still has not struck deals with DirecTV, Dish Network and other pay-TV distributors.
While Time Warner Cable tries to get its sports channels carried here, in San Diego it is refusing to carry a Fox-owned sports channel that has the Padres baseball team. At issue is the price tag Fox is seeking, which is said to be more than $5.00 per subscriber, per month. Interestingly, one reason the price tag is so high is that Time Warner Cable tried to acquire Padres rights, which led to a bidding war that drove up the cost.
Esteves expressed concern about programming costs in general, charging that the increases the operator is paying are "obscene" and "out of control." Costs for programming, she said, have risen by 32% over the last four years and "I don't think our consumers are seeing a value that is up 32%."
The Time Warner Cable executive pinned much of the blame on big media companies such as Disney and Viacom that bundle all their channels together instead of selling on an individual basis. That approach means distributors often take lower-rated channels in return for getting more popular ones. "We don’t get to pick what we pay for," she said.
While programming costs may be keeping Esteves up, she's not losing sleep over Google's new fiber broadband pay-TV service that the search engine giant is launching in Kansas City, Mo., and Kansas City, Kan., where Time Warner Cable is the dominant multichannel video program distributor.
Esteves said she does not anticipate huge demand for Google's expensive high-speed fiber service and that it probably won't expand beyond the experimental level. She said Google would have to spend between $100 billion to $200 billion for national fiber and "we can't imagine a model that makes sense for Google shareholders."
"We take every competitior very seriously, but they're the eighth competitor in the market," she said.
Earlier Wednesday, Google said it had signed a programming deal for its Google Fiber service with Walt Disney Co., parent of ESPN and Disney Channel.