DIRECTV CEO: Lakers TV deal a symbol of 'broken' system

Tuesday, November 06, 2012 3:53 PM ET 

By Deborah Yao

DIRECTV CEO Mike White said industry discussions about carrying the Los Angeles Lakers games exemplify a "broken" system.

DIRECTV and DISH Network Corp. reportedly remain in talks to carry Time Warner Cable Inc.'s new regional sports networks, Time Warner Cable SportsNet and Time Warner Cable Deportes. Time Warner Cable is asking affiliate fees of $3.95 per subscriber per month to carry SportsNet, which will air 53 of the Lakers' 82 regular-season games.

"It's another example of how broken the [regional sports network] system is," White said Nov. 6 during a conference call with analysts to discuss third-quarter earnings. "People take the same content, package it up, buy it up for three times the national average on a per-game basis and then try and stick it to the other distributors in the geography. I think that's very unfortunate."

Time Warner Cable reportedly paid $3 billion for its 20-year deal with the Lakers.

Nonetheless, DIRECTV is "continuing to have active discussions about the Lakers network," White said. "We hope to have a deal on that content."

But he decried the practice of RSNs requiring inclusion in the most popular TV tiers, instead of premium sports packages, because it results in higher prices for everyone, including those who are not sports fans. "Adding other stuff to the bundle that the average consumer can't pay for without allowing it to be sold to those that want to pay for it is just not right," he said.

White said rising programming costs is "clearly the most significant issue facing distributors today" and these price increases are "just not sustainable."

Affiliate fee discussions with content owners continue to be "very, very tough" as distributors try to mitigate these "outrageous cost increases that are unaffordable" to the average consumer, he said.

In the third quarter, DIRECTV said it earned $565 million, or 90 cents per share, compared with $516 million, or 70 cents per share, in the same quarter a year earlier. Revenue rose to $7.42 billion from $6.84 billion. The satellite TV operator added 67,000 net new customers in the U.S. and 543,000 in Latin America.