Time Warner Cable chief defends pricey sports deals
Time Warner Cable Chief Executive Glenn Britt, who has been very public about his concerns over rising programming costs, Thursday defended the company’s expensive TV deals for the Lakers and Dodgers.
“They were going to be expensive no matter what happened; we think we’ve done the best of the alternatives,” Britt said when asked about the contracts during a fourth-quarter earnings call with analysts.
Earlier this week, Time Warner Cable finalized a 25-year TV partnership with the Dodgers at cost of between $7 billion and $8 billion. The company already has a 20-year, $3.6-billion pact with the Lakers.
The deals are getting a lot of attention not only for their high price tags, but because both led to the creation of new channels in an already crowded environment. With the Dodgers getting their own channel, it will bring the number of so-called regional sports networks in Los Angeles to six. Besides the Dodgers network, Time Warner Cable owns two sports channels, and Fox Sports has two. The Pac-12 conference also has a channel for USC and UCLA games.
Britt said Time Warner Cable does not “pretend that these deals are inexpensive or cheap,” but he added that he believes the company will be able to stabilize the cost of sports with these long-term agreements. Time Warner Cable’s strategy with these deals has been to cut out the middle man, which in the case of the Lakers and Dodgers is Fox Sports.
Because sports programming is popular, Britt said, he thinks the investment is worth it over the long term. However, he again reiterated that cable channels that don’t generate decent ratings are in danger of being dropped.
“We’re going to look at everything hard,” he said.
For the fourth quarter ending Dec. 31, 2012, Time Warner Cable profits dropped 9% to $513 million. Revenue at the cable giant increased 10% to $5.49 billion. Though the company increased the number of broadband subscribers for the quarter, it lost 129,000 video subscribers.
However, the company actually gained some subscribers in Los Angeles, which it attributed to the addition of its Lakers channel and new distribution agreements with the NFL Network and the Pac-12 channel.
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