White: DirecTV Fighting to ‘Slow Down’ Content Costs

Says Time Warner Cable RSNs Create ‘Stratospheric Pricing’

DirecTV CEO Mike White continued his ongoing war against rising programming costs, telling analysts Thursday that the second largest pay TV provider in the country is doing everything it can to slow down cost increases in sports programming and retrans.

On a conference call with analysts to discuss second quarter results, white said that reducing retrans and sports cost increases remains the greatest cost challenge of the satellite company.

“We’re doing everything we can to slow down these unsustainable costs increases,” White said.

 While the DirecTV chief singled out high sports network costs, he added that the company is close to finalizing a deal with the SEC network – he said DirecTV has agreed with ESPN on rates for the network, but doesn’t have a launch date yet.

But the network is still at loggerheads with one of the priciest RSNs out there – SportsNet LA, the Los Angeles Dodgers-owned network that is run by Time Warner Cable. Earlier this week, several members of Congress, including Rep. Tony Cardenas (D-Calif.)  sent a letter to Federal Communications Commission Chairman Thomas Wheeler to try to encourage distributors in the area to reach an agreement with the network.  Time Warner cable has said it would submit to binding arbitration for a deal, but other distributors have balked.

On the conference call, White said that he would “consider some form of mediation,” to settle the dispute, but that it was hard “without the active and constructive participation of the ownership of the Dodgers, it’s  hard to see how you get any resolution to this dispute.”

White also said that so far the impact of not carrying the network has been minimal – he said Los Angeles had positive net subscriber additions in the second quarter. And he pointed out that viewership for Dodgers games has been low in the past – he said last year Prime Ticket averaged about 128,000 viewers for Dodgers games in a market that has 4.4 million households.

SportsNet LA is reportedly asking as much as $4 per subscriber per month in carriage fees and coupled with a similar charge for Time Warner Cable SportsNet, which carries Los Angeles Lakers NBA games, AL is one of the most expensive sports markets in the country. White said that Time Warner Cable has created “stratospheric pricing,” with the two RSNs, adding that if those charges were extrapolated across all RSNs, DirecTV subscribers would be paying $26 per month just in RSN fees.

“That’s a huge tax, particularly on the many households that don’t watch sports,” White said.