TWC’s Lakers Deal Changes Game - Multichannel

TWC’s Lakers Deal Changes Game

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Time Warner Cable’s successful pursuit
of television rights for the Los Angeles Lakers, which will
anchor two new regional sports networks, came together
quicker than a fast break.

Through a 20-year deal that could be
worth $3 billion or more in rights fees
to the 16-time National Basketball Association
champions, the nation’s No.
2 cable operator will use the Lakers
rights to tip off a pair of wholly-owned
high-definition RSNs, including a dedicated
Spanish-language channel.

On local TV, Lakers games will shift
from KCAL (road) and News Corpowned
RSN Fox Sports West (home),
the team’s longtime carriers, tipping
off with the 2012-13 season.

Their exclusive negotiating windows
with the club ended last September and
December, respectively.

“We’ve been going after the local
over-the-air rights for a little longer,”
Time Warner Cable executive vice
president and chief programming officer
Melinda Witmer said. “Things
became more intense the last several
weeks. It was a whirlwind.”

BIG-TICKET DEPARTURE

The road to building the RSNs, securing carriage deals and
producing/acquiring other rights will take a lot longer.

The lucrative, high-profile play — FS West reportedly pays
an average of $30 million in rights per season — with the
legendary franchise, owned by Dr. Jerry Buss and seeking
a title three-peat on the court led by Kobe Bryant, marks a
departure for the cable operator.

The MSO manages 34 local channels, nine of which
are local sports networks. But they largely
sport minor-league and collegiate fare,
carrying far lower rights fees, if any.

Calling the Lakers “one of the premiere
teams in all of professional sports, one
that is synonymous with the Southern
California market,” Witmer said the “timing,
availability [of the rights] and chance
to determine our own economic destiny”
all coalesced.

“The Lakers are must-have content
within our footprint,”she said during a
phone interview from a Los Angeles hotel
last week. “We need to have it one way
or another, so you can buy it from someone
else or buy it from ourselves. I’d rather
buy wholesale than retail. This way, we can
manage long-term cost certainty.”

The Lakers gambit doesn’t necessarily
signal that Time Warner Cable has
changed its RSN playbook. “We’ll keep an
eye on things, evaluate possibilities,” she
said.

One reason TWC succeeded in securing
the rights was its “awareness of the market’s
appetite for more Lakers programming
in the way of originals and magazine and news
shows,” Witmer said, adding the MSO would reach out
to the NBA, which holds the on-demand key to archival
games and the digital rights for “TV Everywhere” multiplatform
opportunities.

“We do know how to program locally,” she said, which
in this case will also manifest in Southern California lifestyle
fare.

What about Major League Baseball’s Los Angeles Dodgers,
whose deal with Fox’s Prime Ticket channel expire
after the 2013 season? “To be clear, we have not had any
conversations with anybody else at this
point,” Witmer said.

The Los Angeles Angels of Anaheim
have a rights deal with FS West that
runs through the 2015 campaign.

Soccer and boxing properties figure
to be on TWC’s radar, especially for the
Spanish-language RSN. “We’re looking
for year-round programming, to bring
value to consumers and distributors,”
Witmer said.

TWC has not yet announced pricing
strategies for the two services. FS West,
which also has rights to the National
Hockey League’s Anaheim Ducks, carries
an average license fee of around
$2.35 per month; and Prime Ticket,
featuring the NBA Clippers and NHL
Kings, commands $2.07, according to
SNL Kagan.

Fox said it “made an offer to the Lakers
that would have paid them one of
the highest local TV-rights fees in professional
sports. We did not believe
that going higher was in the best interest
of our business or pay TV customers
in Los Angeles, who will bear the cost of this deal for
years to come.”

The yet-to-be-named networks will be available to all
satellite, cable and telco distributors in Southern California,
Nevada and Hawaii.

In addition to Time Warner Cable, which has around
2 million homes in those markets, the Lakers networks
will need carriage on the other major distributors in those
areas: Charter Communications, Cox
Communications, DirecTV, Dish Network
and AT&T’s U-verse TV platform.

All told, the Lakers TV territory encompasses
some 6.5 million homes,
TWC said.

SPANISH NET ‘A BOOST’

A Lakers spokesman expressed confidence Time Warner Cable would build
a strong network and secure plenty
of carriage over the next 18 months.
“There are no concerns that Time
Warner Cable will attain the same
level of distribution, if not more,” he
said, adding Buss was “ecstatic” about
the formation of the Spanish-language
service.

“The Spanish-language channel is a
huge boost,” Witmer said. “The demographics
are changing rapidly in the
footprint. We conducted market research
and not only do Latinos love the
Lakers, they want Hispanic telecasts.”

One TV sports executive questioned
how valuable that channel can be.
“First off , it’s not for every home,” he said. “Second, I think
most of the Latinos who want to see the Lakers already
have been watching the games on FS West and KCAL.”

This season, Lakers games have generated a 4.8 household
rating, 277,000 households and 410,000 viewers in the
Los Angeles DMA.

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