The broadcaster has begun to warn more than 1.5M viewers in 14 markets that its stations could disappear from Time Warner Cable and Bright House Network systems at the end of next week unless the companies reach a new retransmission consent agreement. Stations at risk include LIN TV‘s NBC, CW, and MyNetworkTV affiliates in Austin; CBS and CW stations in Buffalo, NY; NBC and CW outlets in Dayton, OH; and Fox and CW stations in Green Bay, WI. The two cable companies account for about 20.6% of LIN’s viewers, according to SNL Kagan data. LIN says on its Buffalo CBS affiliate’s website that “It costs a substantial amount of money to produce local programming, bid for top-quality programming, invest in high-definition, and make other upgrades to equipment and technology so we can deliver a superior product.” It adds in a statement that it wants “less than what Time Warner pays for many of its cable networks with far lower ratings.” But Time Warner Cable spokesman Jon Gary Herrera says that LIN is asking for a 50% rate hike, “a very steep increase from a contract negotiated two years ago.” Stations and pay TV companies typically settle retransmission consent disputes at the eleventh hour. But LIN’s stations were blacked out on Time Warner Cable for 25 days in fall 2008 when negotiations reached an impasse.
NEW YORK, NY (April 29, 2013) – Time Warner Cable today announced that Arthur T. Minson, Jr. has been named Executive Vice President and Chief Financial Officer, effective May 2. He will report to Glenn A. Britt, Chairman and Chief Executive Officer. The company also announced that Irene M. Esteves will be leaving the company.
“We’re delighted to welcome Artie back to Time Warner Cable,” Mr. Britt said. “His deep knowledge of the cable industry, the broad experience he gained at AOL as CFO and COO, and his outstanding reputation in the financial community make him a great addition to our management team.”
As CFO, Mr. Minson will oversee all of the company’s finance functions, including treasury, accounting, financial planning and analysis, tax, mergers and acquisitions, and investor relations. He also will oversee a range of corporate services including supply chain and business affairs.
Shares are down in pre-market trading after the No. 2 cable operator reported Q1 numbers that were up — but not as much as the Street anticipated due in part to a drop in residential video customers and rising programming costs. Time Warner Cable generated $401M in net income, +5% vs the first three months of 2012, on revenue of $5.5B, +6.6%. The revenue number came close to the consensus forecast, but earnings per share at $1.34 missed predictions for $1.38. The company ended the quarter with about 12M residential video customers, -119,000. Not including subscribers added with the February 2012 acquisition of Insight Communications, video revenues fell 4.9% to $2.6B. The company says that price increases and a rise in sales of extra-fee service tiers were offset by “declines in video subscribers and premium network and transactional video-on-demand revenue.” Video programming costs rose 6.8% to $1.2B, Time Warner Cable says in an SEC filing. The number of residential broadband subscribers rose by 131,000 to 10.9M while phone customers were -36,000 to 5M.
Pay TV subscribers who don’t watch sports likely will have to cut the cord if they want to escape the rocketing costs for programming rights and new channels. At least that’s one of the conclusions I take away from RBC Capital Markets’ David Bank’s smart, 91-page report this morning about the state of sports media. He notes that programmers have a powerful incentive to engage in an arms race for sports: The rewards for airing games — from rising ad sales and pay TV affiliate fees — still outweigh the rising amounts that football, baseball, and other sports rights holders are charging. As a result, channels offering sports “should be able to expand [profit] margins,” Bank says. Won’t that lead to a war with distributors such as DirecTV and Time Warner Cable, who say that subscribers will bolt if monthly bills continue to rise? Not necessarily, because their hands aren’t clean. “How can these distributors complain about unfair pricing when they are in turn asking for the same kind of pricing on the same kind of content?” Bank asks. DirecTV owns three major regional sports networks (ROOT Sports in Pittsburgh, Rocky Mountain states, and the Northwest) while Time Warner Cable has a new channel for the Los Angeles Lakers. Bank acknowledges that “we must ask ourselves whether the [growing number of regional sports networks] risk damaging the ecosystem.”
EXCLUSIVE: Ovation laid off employees in its Santa Monica office Friday, a month after Time Warner dumped the arts channel from its lineup citing poor ratings and a less-than-compelling programming slate. Reps would not confirm the size of today’s staff cuts but sources say layoffs hit 20-25 employees — almost a fourth of its 95-person corps. Chief Creative Officer Robert Weiss confirms to Deadline that the layoffs are the first wave of a company-wide reorganization that will affect its LA, Chicago, and New York offices as Ovation whittles its resources in order to relaunch stronger programming initiatives in 2013 and 2014, a must if the six-year-old cable arts outpost is going to survive the Time Warner blow-off.
The Wall Street Journal says today that the No. 2 cable operator’s CEO will leave at year end, and Time Warner Cable doesn’t come close to trying to deny it. “Glenn is under contract and if and when he decides to step down, we’ll have an announcement,” the company says. Britt’s current contract, amended in 2011, expires at the end of the year according to Time Warner Cable’s most recent proxy statement. Britt’s compensation for 2011 came to $16.4M. That was about twice as much as the package for the second highest paid exec, COO Rob Marcus, who likely would replace Britt. The leak, attributed to “a person familiar with the matter,” comes just a day after Time Warner Cable disappointed investors with its higher-than-expected loss of video customers and uninspiring financial guidance for the rest of the year. Shares fell 11.6% yesterday.
The No. 2 cable operator took it on the chin this morning after telling analysts in a conference call that rising programming costs and the lack of political ads will ding profits more than many expected. The stock is down 10% at mid-day. The disclosures inevitably led some to wonder whether Time Warner Cable contributed to its problems, at least in Southern California, by agreeing to pay hefty amounts to help create a regional sport channels that carries the Los Angeles Lakers and become a charter distributor for one for the Dodgers. CEO Glenn Britt says he had little choice. “We do not pretend that these deals are inexpensive or cheap,” he said. But sports is must-have programming, and the agreements “minimize and stabilize the cost over a long time period….In both cases these rights were up for auction and were going to be expensive no matter what happened.”
Execs say it’s too early to calculate the hit it will take in 2014 when the Dodgers’ SportsNet LA launches. The upshot, though, is that the vow Britt made last month to draw the line on rising programming costs will mostly affect small channels that few people watch — including Ovation, which the cable company ditched at year end. Britt renewed his commitment to “drop or re-position channels that don’t add to price-value.” Time Warner’s programming costs jumped 32% over the last four years, he says, while the Consumer Price Index rose 9%.
LOS ANGELES, (January 28, 2013) – The Los Angeles Dodgers ownership group created American Media Productions, LLC (AMP) in December 2012 to launch a new Los Angeles Dodgers regional sports network. Today, AMP announced its plans for SportsNet LA, the new regional television home for the Los Angeles Dodgers beginning with the 2014 Major League Baseball season. In addition to being the exclusive local home for all of the Dodger games, SportsNet LA will provide comprehensive behind-the-scenes Dodger programming, featuring more insights, analysis and commentary about the team than ever available before.
UPDATE, 4 PM: Current TV CEO Joel Hyatt just confirmed the sale in a memo to staffers. “Getting this transaction done was very difficult,” he writes. (Read the network’s official statement after the original break of the story.) Since Time Warner Cable would not consent to the sale “Current will no longer be carried on TWC. This is unfortunate, but I am confident that Al Jazeera America will earn significant additional carriage in the months and years ahead.” Time Warner Cable says that it is “removing the service as quickly as possible.” The loss of the No. 2 cable operator will hurt: Time Warner Cable has 12.2M video subscribers and Current reaches about 59M homes. Others also could follow Time Warner Cable’s lead as they look to prune their often bloated channel lineups. Al Jazeera has fought an uphill battle to win carriage on U.S. cable systems. Operators say it’s too expensive, and that there’s too little interest in the subjects it covers. Fans of the channel say it’s due to unreasonable fears that Al Jazeera’s content will be too controversial and possibly propagandistic. Al Jazeera fought back, and further infuriated cable execs, by live-streaming its English-language programming.
The arts channel went dark on the No. 2 cable company’s systems yesterday, although Crown Media’s Hallmark Channel and Hallmark Movie Channel — which were also on the bubble — survived with a last-minute, long-term carriage deal. But Time Warner Cable warns subscribers in an online notice today that there’s no guarantee it will continue to carry several other channels whose contracts expire soon including mainstays such as E!, Lifetime, and Starz, and a bevy of international services. While AMC Networks-owned IFC and WEtv made it into 2013 on Time Warner Cable, they’re still in jeopardy — along with soccer channel GOL TV — as part of CEO Glenn Britt’s campaign to rationalize the company’s bloated channel offerings. Former Vice President Al Gore’s Current TV also remains in danger, although it survived a possible year-end purge. Other channels Time Warner Cable identified as being under review include Encore, Music Choice, News 12, NHL Network, ShopNBC, Smithsonian HD, and Style Network. Last month, Britt said at an investor conference that his company is “going to take a hard look at each service and those services that cost too much relative to the viewership, we’re going to drop them.” With the economy “bouncing along the bottom,” he said that “the consumer is telling us that we can’t afford these prices anymore.”
UPDATED: This seems to be what Time Warner Cable CEO Glenn Britt was talking about this month when he threatened to drop some channels as a way to control costs. The cable company has informed Ovation that it will be dumped at the end of the year, when its contract expires. “Ovation is among the poorest performing networks, and is viewed by less than 1% of our customers on any given day,” the No. 2 cable operator says. “We’ve paid more than $10 million in carriage fees to Ovation over the past several years. They’ve had ample opportunity to improve the ratings and the content, and have failed to deliver.” It adds that Ovation’s not as arts-oriented as it claims: “One 7-day period in November 2012 shows that 70% of their schedule was old movies that are repeated, numerous repeats of the PBS show Antique Road Show, Infomercials that are unrelated to the arts, and repeats of TV shows from broadcast networks….Just as broadcast and cable networks make decisions to cancel or move shows that fail to perform, we are obliged to make the same decisions with networks.” Ovation doesn’t buy Time Warner Cable‘s cost-control argument. “While they are investing huge amounts in sports programming, they’ve chosen to limit their customers’ viewing options by cutting the only arts network in their lineup,” Ovation’s EVP Content Distribution Brad Samuels says. “Ultimately, we hope that Time Warner Cable will see the value our other Affiliate partners see in Ovation and will reconsider their decision.”