Time Warner Cable CFO: 'We're Not in The Content Business' Despite LA Lakers Deal

8:55 AM PST 12/05/2011 by Georg Szalai

But a 20-year deal for the rights to the NBA franchises games this year helps the cable giant to manage ever-increasing programming costs, says Irene Esteves.

NEW YORK - Cable giant Time Warner Cable this year struck a 20-year content deal with the L.A. Lakers not because it wants to be more of a content company, but because it wanted to have more control over rising programming costs, CFO Irene Esteves said here Monday.

She also told a UBS media investor conference that broadband video competition to pay TV operators has been "a complement to our TV offering." She added: "It's not been a threat."

If online video providers keep growing usage, "we have this wonderful hedge" in cable's broadband services, Esteves said.

In that context, she said that usage-based pricing for broadband services will become a reality sooner or later. She emphasized that charging heavy broadband users more would be in line with pricing strategies in other industries and allow the firm to give consumers the option to pay less if they use less.

She said TWC wants to introduce usage-based pricing "the right way rather than quickly" though.

Earlier in the day, Comcast CFO Michael Angelakis said his company wasn't opposed to usage-based pricing, but sees no immediate  need to "nickel and dime" customers.

Esteves also told Wall Street on Monday that "we are not happy with our video losses." The firm is looking at new bundling opportunities and a better customer experience to address the issue, she said.

Discussing the Lakers deal, which is reportedly worth $3 billion, Esteves said: "We're really dealing with the programming costs" and "incredible" sports cost increases, along with broadcast retransmission fees. "We're getting hit on all sides." The Lakers deal was an opportunity to take out the middle-man.

"We're not in the content business," Esteves emphasized though. "We don't particularly want to be." But buying the Lakers rights was the lowest-cost option for TWC and allowed it to avoid "being held hostage on sports programming," she said.

Reports recently said the firm will also look at a possible similar deal with the LA Dodgers.

Programming costs have risen 8 percent for the past two full years, and 2011 will be in the same ballpark, the CFO said.

Is cable still a growth business? "The short answer is yes," Esteves said. She cited the "terrific growth engines" of broadband and business services. And she highlighted that 2012 advertising sales should benefit from the U.S. elections and the Olympics.

Asked about the TV Essentials program bundle for economically sensitive TV subscribers, Esteves said it has helped provide consumers a lower-priced option, but also given TW Cable the ability to talk to consumers. "We have been able to upsell them" when they call about TV Essentials, she said. "It's been very successful."

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