Sports’ Latest Domino: DodgersTWC Nears $8 Billion Deal for Club TV Rights 1/28/2013 3:00 AM Eastern
The stakes — not to mention the prices — continue to rise in the regional sports network game.
Time Warner Cable at press time last Friday was nearing a deal valued at somewhere between $7 billion and $8 billion with Guggenheim Partners to present telecasts of the Los Angeles Dodgers over a 20- to 25-year span. Not only would that level mark a record for a local/ regional rights pact, but under its reported terms, the nation’s No. 2 MSO would pay the carriage fees — expected to be as much as $5 per month per subscriber — for any distributor in the footprint that doesn’t pick up the new dedicated Dodgers service.
Fox Sports’ Prime Ticket, whose contract expires after the upcoming campaign, has been showing Dodgers games since 1997.
Guggenheim, which purchased the club last year for a record $2.15 billion, would own the network, with Time Warner Cable handling management and operational duties for the service, which would begin showing Dodgers’ telecasts during the 2014 MLB season.
Neither party would comment about the deal, which had yet to be officially announced as of press time.
“It’s certainly an unconventional approach,” one veteran sports TV executive said. “It’s one we have not seen in the 30 years of the RSN business.”
A Dodgers win would mark the second time Time Warner Cable has snagged rights to a high-profile team in Los Angeles from News Corp.
Motivated to gain cost certainty by cutting out the middleman, the cable company paid some $3 billion for Los Angeles Lakers’ rights over a 20-year span and launched a pair of RSNs last year orbiting the storied NBA franchise.
Chairman and CEO Glenn Britt, at an investment conference last month, said Time Warner Cable is taking a harder line against programming costs and would drop some channels that did not deliver results commensurate to their license fee. Arts proponents Ovation became a casualty on the operator’s systems when its carriage contract expired Dec. 31, 2012.
The Ovation ouster and the high price tag attached to the Dodgers may catch the attention of federal regulators and those who believe sports networks should be subject to special tiering or a la carte pricing.
“After Glenn Britt talks about controlling costs, Time Warner Cable drops a small channel, but then goes out and pays more billions for another sports channel in L.A.,” a sports-marketing official said. “Time Warner Cable may have killed the goose that laid the golden egg.”
Before 2012, the two Fox RSNs — Fox Sports West and Prime Ticket, charging a combined monthly subscriber fee of around $5 — basically offered much of the sports programming that is now being diffused across these varied services.
The Lakers’ channels command a combined monthly license fee of $3.95, and the Pac-12 Network national service and its UCLA/USC regional spinoff add another $1 or more.
Add $4 to $5 for the Dodgers, and Los Angelenos’ pay TV monthly RSN pay TV bill would approach the $15 mark.
FOX FORTIFIES LINEUP
Losing the Dodgers, following the Lakers’ exit, certainly would hurt Fox in the No. 2 market, but there is no crying in baseball, and the programmer had already fortified its RSN roster elsewhere — seemingly at the expense of TWC, which still has to pay Fox for its RSN duo in L.A.
News Corp. has returned to the New York RSN scene by taking a 49% stake in the Yankees’ YES Network, and is expected to push for an increase in the channel’s $3 subscriber fee throughout its TV territory, where TWC is the dominant provider.
Fox Sports Ohio purchased SportsTime Ohio, home of MLB’s Cleveland Indians; TWC had been handling affiliate and ad sales for the service. Fox also outbid TWC for the rights to the San Diego Padres; TWC is now the only operator not carrying Fox Sports San Diego.
Factoring in a Dodger deal, Los Angeles-area cable subscribers could pay as much as $15 per month in RSN license fees.