Last Friday afternoon, David Rone – president of sports, news & local programming for Time Warner Cable – spoke at the PULSE conference at UCLA’s Anderson school, discussing (among other things) the company’s massive investment in the Los Angeles Lakers.
That night, Lakers star Kobe Bryant tore his Achilles tendon, not only casting a cloud over the current season (even if the team makes the playoffs) but, given the injury’s nature and recovery time, darkening the franchise’s outlook for next year and beyond. (Update: The Lakers did make the playoffs, earning an opening-round matchup with San Antonio, and likely producing sighs of relief at Time Warner Cable.)
Such are the vagaries of sports, which in part explains why people are drawn to them. Nobody can predict with certainty how a game’s going to turn out, or anticipate something like Wichita St. or Florida Gulf Coast making deep runs into the NCAA basketball tournament. And beyond attracting huge audiences, most fans feel compelled to watch sports live, making them even more attractive to advertisers in this age of DVRs and ad zapping.
“We like the value proposition of what we bring to bear,” Rone told the audience, comparing what subscribers shell out to multichannel video programming distributors favorably to, say, attending a movie, and noting sports command “the most passionate following in all of entertainment programming.”
Yet the current fortunes (or rather, misfortunes) of the Lakers also underscore why the TV industry’s reliance on such programming is in many ways fraught with peril — especially if, as Rone acknowledged, if there are any serious changes forced upon the current business model.
Clearly, this has been a topsy-turvy year in L.A. sports, with the Lakers’ playoff chances coming down to Wednesday night’s game — threatening to leave them on the sidelines for only the third time since Jimmy Carter was elected president — after a season plagued by injuries even before Bryant went down.
At the same time, the crosstown rival Clippers — for years a league doormat, whose owner Donald T. Sterling has long been a punchline — have become a serious contender, while stewardship of the Lakers appears shakier with the late Jerry Buss’s heirs running the franchise.
Admittedly, the Lakers haven’t been the only local team to experience disappointing seasons, including USC football and UCLA basketball, even as the Pac-12 conference launched its own start-up network.
Nevertheless, Time Warner Cable — which inked a 20-year deal, valued at close to $3 billion, to carry the Lakers on two regional networks in 2011 — has cited access to such local sports as a good bet. The company also doubled down by forging a partnership with the Los Angeles Dodgers, perhaps the only commodity other than the Lakers that (when they’re winning, anyway) can bring all the disparate communities in the U.S.’ second-largest city together.
Still, questions remain. For starters, the explosion of regional networks has added to already stressed cable bills, as companies like TW Cable demand close to $4 a month for the Lakers channel. And if that seems like a small price to pay in April and May during a playoff push, one has to wonder what value subscribers are getting for their buck between now and October if the Lakers take an early vacation.
Late last year, DirecTV CEO Mike White told analysts the existing economics regarding regional sports networks is “broken,” an assertion Rone labeled “convenient” in the context of negotiating for these new channels. Even so, Rone later conceded the imposition of an a la carte cable model could potentially “crash the system,” including sports franchises and players reaping the sweet rewards from lucrative TV deals.
For now, though, that’s an unlikely prospect, and thanks to all the TV money piled high at their feet, owners have almost managed to program risk out of the equation — despite the assumption, as the New York Times’ Richard Sandomir noted, we’re headed toward “higher costs for sports fans in Los Angeles and everywhere else.” Think of them like the meth dealers in “Breaking Bad,” only perhaps with less scruples.
By almost any metric that’s nice work if you can get it, but the media players in the sports game don’t enjoy the same luxury — and like the Lakers’ front office, can hardly rest easy about what sort of bad breaks might lie ahead.