Time Warner Cable defends huge Dodger deal

CEO Glenn Britt tried to deflect any criticism of hosting a new Dodgers channel - and along with it raising cable fees - by emphasizing the potential cost savings of cutting a long-term agreement. The Dodgers deal runs 25 years and the ongoing contract to carry the Lakers is for 20 years. He's presuming that since the costs to carry sports will keep increasing, an extended deal makes economic sense. It's a huge bet. Meanwhile, look for low-rated channels to keep disappearing on TWC. From Multichannel News:

Time Warner Cable chief financial officer Irene Esteves added that the economics of the Dodger agreement are similar to its Lakers deal in that the MSO is guaranteed access to important sports programming over a long period of time. "Our objective here as it was with the Lakers is to is to ensure that access to programming at a certain cost," Esteves said. "We think over the long term this will be a lower cost alternative than if we had not guaranteed those rights for the 25 year period." She added that given the MSO's experience with the Lakers, given the net cost of that deal compared to where sports programming costs are headed, it was the right thing to do.

TWC had a weak fourth quarter, with a loss of 129,000 video subscribers. But the company gained some customers in Los Angeles, which it said was the result of the Laker channel - as well as the addition of the NFL Network and the Pac-12 channel. Overall, Time Warner Cable missed earnings estimates for the quarter, and executives warned that profit margins might be affected in the short term by sports-related programming costs. The stock is down this morning.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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