The Dodger's TV Rights Are Up in the Air for Another Yearby
Charter sees no accord with AT&T’s DirecTV, Frontier and Cox
Stand-off between pay-TV providers entering its fourth year
With baseball season just around the corner, millions of Dodger fans are staring at yet another year without their favorite team on TV.
Charter Communications Inc., which acquired rights to manage the Dodgers’ SportsNet LA after buying Time Warner Cable Inc. in May, remains locked in a standoff with other Los Angeles-area pay-TV providers over the price of the channel. The company plans to be the sole service carrying Dodger games this season. Dodger pitchers and catchers report Wednesday for spring training.
“If fans want to see SportsNet LA and Dodgers games, they need to switch to Charter’s Spectrum service,” Charter said in a statement. “At this point we don’t expect any other distributors to carry SNLA by opening day.”
Los Angeles is the second-biggest U.S. media market, with almost 5 million pay-TV subscribers. After buying Time Warner Cable, Charter serves almost half of them. The No. 2 provider is AT&T, the owner of DirecTV, at about one-third. The rest are divided among Frontier Communications Corp., Dish Network Corp., Cox Communications Inc. and smaller players.
After agreeing to an $8.35 billion, 25-year deal for Dodgers games, Time Warner Cable asked other pay-TV companies to pay almost $5 a month per subscriber for the channel. That made SportsNet LA one of the priciest cable networks. Rivals balked at what they said was an exorbitant price and the demand that SportsNet LA be on basic cable, meaning all of their customers would have to pay. Last March, Time Warner Cable lowered the rate by 30 percent for one year, but competitors still said that was too high.
Nothing has changed, a Cox spokesman said, adding the cable provider remains open to carrying the network at the right price and if the terms don’t burden all of its customers, a sentiment also voiced by Dish. Frontier said it doesn’t have plans to add the channel at this time, while the Dodgers declined to comment.
While the chances for a deal look bleak, developments since last season offer a glimmer of hope. The owners of the Los Angeles Dodgers, led by Guggenheim Partners Chief Executive Officer Mark Walter, are seeking to sell a minority stake in the team. It could be more valuable if additional fans can watch the games, said Lee Berke, president of LHB Sports, Entertainment & Media Inc., a consulting firm.
“If you want to maximize the value of the team for a new investor, having the games on every conceivable network is important,” Berke said. “That’s how you build a new generation of fans.”
In addition, DirecTV, the largest holdout, could face pressure to reach a deal. The Justice Department sued the company in November for allegedly colluding with other pay-TV providers to block the channel. The suit says Dan York, then chief content officer at DirecTV, “regularly communicated with his counterparts” at other pay-TV companies to preserve a united front against SportsNet LA’s demands.
AT&T has denied wrongdoing in the case. Fletcher Cook, a company spokesman, declined to say if the companies are talking.
In a recent court filing, DirecTV said it refused to pay top dollar for Time Warner Cable Inc.’s Los Angeles Dodgers channel because it had been “burned” earlier overpaying to air Lakers games -- not because it was conspiring with others to get an edge on a competitor.
Time Warner Deal
AT&T is also seeking approval from the Justice Department for its $85.4 billion purchase of Time Warner Inc. and could agree to carry the Dodgers network to appease regulators, Berke said.
“I expect that everybody, for a variety of motivations, will eventually start talking again and reach a deal that makes sense,” Berke said.
Even with more than 2 million subscribers in the area, Charter is losing money on SportsNet LA. It’s also charging its subscribers less than the $4.90 monthly rate it sought from other providers. Analysts could have questions about the contract when Charter reports earnings on Thursday morning.
And with the standoff entering its fourth season, many devoted Dodgers fans have likely found other ways to watch the games or are doing without. The team remains as popular as ever. The Dodgers have led the majors in attendance for four straight years, and are expected to be one of the best teams this season.
Economic conditions for cable programmers have changed since the Dodgers and Time Warner Cable announced their agreement in January 2013. New online services selling fewer channels at lower prices have put pressure on sports networks to justify their rates. The rise of “skinny bundles” forces pay-TV providers to drop expensive channels to stay competitive, according to Matthew Harrigan, an analyst at Wunderlich Securities Inc.
In November 2015, Comcast Corp., the No. 2 U.S. pay-TV provider, dropped the YES Network, which airs New York Yankees games, during a contract dispute. The Yankees and Comcast reached a new agreement after a 13-month blackout as part of broader deal with YES’s owner, 21st Century Fox Inc.
“Whatever problem Time Warner Cable had with the Dodgers has been amplified by the trend in skinny bundles,” Harrigan said. “Their negotiating position gets worse and worse.”