Networks

TWC’s Esteves: Sports Nets Are a Cost Hedge

9/17/2012 6:25 AM Eastern

With the launch of two Los Angeles regional sports networks — Time Warner SportsNet and the Spanish-language Time Warner Deportes — only a few weeks away, Time Warner Cable chief financial officer Irene Esteves told an investor conference last week the main driver for starting the network was to limit costs, not rake in RSN cash.

The No. 2 U.S. cable operator bought TV rights to Los Angeles Lakers National Basketball Association games for the next 20 years to anchor the channels, both of which are scheduled to launch Oct. 1.

“We’re very excited about both of them,” Esteves, at the Bank of America Merrill Lynch Media, Communications and Entertainment conference in Beverly Hills, said of the channels. “We think this is going to be terrific for our customers.”

She added: “As we’ve always said, our only reason for being in this business is to ensure longterm access at reasonable rates for important sports programming. We prefer not to be in this business, and if we had been charged more reasonable rates for important sports programming, we probably wouldn’t be in this position. But now that we are, we’re going to make it a successful business.”

Reports have estimated Time Warner Cable committed $2 billion to $3 billion for the Lakers’ rights and that it’s seeking as much as $3.95 per month, per subscriber in carriage fees. The channels will be on Time Warner Cable’s systems in the Los Angeles market, but TWC has not reached deals with other distributors yet.

Programming fees the MSO pays have risen about 32% over the past four years, four times the rate of infl ation, Esteves said. “I don’t think our consumers are seeing a value that is up 32%,” she said.

October