Time Warner Cable: Lakers Deal A Hedge Against High Programming Costs

Time Warner Cable chief financial officer Irene Esteves told an audience at an investor conference Monday that its recent partnership with the NBA Los Angeles Lakers for a regional sports network was more of a hedge for the company against rising sports programming costs than an entry point into the content business.
Time Warner struck a 20-year deal with the Lakers in February, to launch two regional sports networks, including a Spanish language channel, beginning in the 2012-2013 season. The agreement is estimated to be worth about $3 billion.
Esteves said at the UBS Media & Entertainment conference in New York Monday that TWC is "getting hit on all sides" regarding rising sports fees, affiliate fee charges and retransmission consent. While she stressed that the cable giant has no desire to get into the content business, buying the Lakers rights was the lowest cost option for TWC and gave it the "opportunity to cut out the middle man and manage our own programming costs."
Esteves said that overall programming costs have risen about 8% annually for the past two years and are expected to "be in the same ballpark" in 2011.