Lakers, TWC Deal Shows Power of Sports

Any doubts as to the long-term value of sports programming have been cast aside today. Time Warner Cable and the Los Angeles Lakers inked a 20-year deal to launch a pair of regional sports networks beginning with the 2012-13 season, when current deals with KCAL Los Angeles and Fox Sports Network expire.

“It is another affirmation that sports has become the biggest entertainment property in America,” says industry consultant Neal Pilson, a former president of CBS Sports. “We have always known that major sports franchises are guaranteed audience generators unlike any other property. A good movie might not make it, and a hit TV show may get cancelled. But, 50 years from now, you can rest assured that people in Los Angeles will be watching the Lakers.”

Terms of the deal were not disclosed. Under its deal with Fox Sports West, the Lakers were getting about $30 million a year in rights fees, according to reports. Some industry observers value the new, 20-year pact at $3 billion, although Time Warner Cable dismisses that figure.

The deal is notable for a few reasons. First, it shows the increasing role that cable operators may have in the launch of regional sports networks.

“If you have a market where the cable operator has 50% or more of penetration,” says Pilson, “they could look at a sports channel with a local team.”

Another reason the deal is important is that it will result in the launch of the first all-Spanish-language regional sports network.

Lakers owner Dr. Jerry Buss said in a statement that Time Warner Cable has been producing quality sports programming for over a decade and the Lakers have been producing championship seasons for even longer. “I am particularly proud of being part of the first-ever Spanish-language RSN in the country,” he said. “Together I’m confident we will delight our fans.”

Says Pilson, “Hispanic TV is one of the growth sectors in the sports marketplace, and that isn’t surprising with soccer and, frankly, basketball being so strong [with Spanish language viewers]. An all-Spanish-language network won’t work in every local market, but, certainly, Los Angeles is a great place to start.”

The networks will be available to all satellite, cable, and telco distributors in Southern California, Nevada, and Hawaii.

As for the impact on Fox Sports West, it still has rights to the National Hockey League’s Anaheim Ducks and Major League Baseball’s Los Angeles Angels of Anaheim. Sister RSN Prime Ticket has rights to the NBA’s Clippers, the NHL’s Kings, and MLB’s Dodgers. Fox has long-term pacts with all of the teams, save for the Dodgers, whose contract runs through the 2013 baseball season.

“Fox made an offer to the Lakers that would have paid them one of the highest local-TV-rights fees in professional sports,” says a Fox Sports spokesperson in a release. “We did not believe that going higher was in the best interest of our business or pay-TV customers in Los Angeles, who will bear the cost of this deal for years to come.”

Lakers home games have been airing on FS West since 1985, and KCAL has been televising the club’s road games since the 1970s.

“This long-term agreement represents a huge win for all Lakers fans, providing destination channels, more content, and more platforms for the Lakers, one of the premier brands in professional sports today,” says Time Warner Cable’s Chairman/CEO Glenn Britt in a statement. “It allows us to secure great ‘must-have’ content for our customers in an advantageous arrangement that affords us greater control over our own economic destiny for decades to come.”

It also will, no doubt, be a factor in the upcoming NBA negotiations on a new agreement between players and owners .