Time Warner Cable's Lakers deal is bad news for other pay-TV distributors
The news that Time Warner Cable has struck a 20-year deal that makes it the exclusive television broadcast rights holder to Los Angeles Lakers games starting with the 2012-13 season no doubt has other pay-TV providers in Southern California getting ready to guard their wallets.
While terms were not disclosed, Time Warner Cable didn't manage to wrestle away the world champs from their current cable and broadcast homes -- Fox Sports West and KCAL-TV, respectively -- by under-bidding the incumbents. Fox Sports West was paying $30 million a year for the 35 games it was carrying and Time Warner Cable will be carrying north of 50 preseason, regular-season and postseason games that are not nationally telecast, so that price tag will go way up.
"Given the size and length of this deal and importance of it to Time Warner Cable, they are going to attempt to earn it back, and one of the ways to do that is to price aggressively on subscriber fees," said Lee H. Berke, chief executive of media and sports consulting firm LHB Sports, Entertainment & Media Inc.
Regional sports channels are some of the most expensive properties for distributors. Fox Sports West costs about $2.37 per subscriber per month, according to industry consulting firm SNL Kagan.
Odds are that Time Warner will seek a higher price than that for its new English and Spanish Lakers channels, due to launch in fall 2012. Even though Fox Sports West carries other teams, including the Angels, the Lakers are considered a premium property.
What will be interesting to watch with regards to Time Warner Cable's distribution efforts will be whether satellite broadcasters DirecTV and Dish and other carriers such as Verizon and AT&T will look for government help if they feel they are being gouged.
Relief for them may come if they can persuade the Federal Communications Commission to extend an order designed to give distributors the opportunity to enter arbitration if they are at a standstill with a programmer over a deal for a sports channel.
Known as the Adelphia Order (because it was put in place after Time Warner Cable and Comcast bought Adelphia Cable), the rule -- which applies only to local sports channels -- is due to expire in July 2012.
However, before it can be lifted, the FCC is supposed to issue a report on access to regional sports networks and examine distribution issues. The commission will then decide whether to lift the order or extend it. Although it is a long way away, don't be surprised if a big debate emerges in the industry over whether the Adelphia Order should live or die.
-- Joe Flint
Photo: Lakers' Kobe Bryant dunks against Oklahoma City. Credit: Wally Skalij / Los Angeles Times